Rishi Sunak ‘plans to cut income tax by 2p in the pound or lower VAT before the next election’
Rishi Sunak is said to be planning to slash income tax by 2p in the pound before the next election as he hopes to end his reputation as a ‘high-tax’ chancellor.
The Chancellor of the Exchequer, 41, is reportedly planning to cut income tax over the next three years, ahead of the next general election in 2024.
His preferred plan is understood to be cutting income tax, but ten proposals have been drawn up in total, which include cutting inheritance tax and charging households using green energy lower rates.
It comes after the chancellor urged voters to trust that he will deliver on his pledge to cut taxes before the next general election, as he said ‘actions speak louder than words’.
Rishi Sunak is reportedly planning to cut income tax over the next three years, ahead of the next general election in 2024 as he hopes to end his reputation as a ‘high-tax’ chancellor
Mr Sunak hiked taxes at the Budget in October, with his changes set to push the tax burden to its highest level since Clement Attlee’s post-war Labour government in the early 1950s.
But Sunak is determined to end his reputation as a ‘high-tax, high-spend’ chancellor, while Boris Johnson also has hopes to be a tax-cutting prime minister.
Amid reports of his income tax plans, Sunak is said to have told his colleagues that there will have to be tighter limits on public spending if the tax cuts can go ahead.
A Treasury source told The Times: ‘But things are tight and in order to deliver on our promise to cut taxes, we need to be disciplined on spending.’
Another proposal could see Sunak cut the VAT headline rate of 20 persent, while the Treasury is reportedly working on plans to increase the inheritance tax threshold.
The current threshold stands at £325,000, which increases if it involves properties left to children, met 22,800 estates paying 40 per cent on anything higher. The figure has not been adjusted since 2009.
Of the ten proposals that have been drawn up, it is understood that more detailed work is being carried out on three plans, focused on cutting VAT, income tax and inheritance tax.
A treasury source reportedly said that although plans could be disrupted by Covid and inflation, both Sunak and the Prime Minister want the cuts to go ahead.
Sunak’s (op die foto) preferred plan is understood to be cutting income tax, but ten proposals were drawn up, which include charging households using green energy lower rates
Vroeër hierdie week, the chancellor urged voters to trust that he will deliver on his pledge to cut taxes before the next general election.
He pointed to new changes made to the Universal Credit system as evidence that he wants to do more to help families.
He said that ‘actions speak louder than words’ as he hailed the move to slash the Universal Credit taper rate from 63p in the pound to 55p.
Sunak said that ‘should give people the confidence they need to know that when I said my goal is to reduce taxes over the course of this Parliament, I mean it’.
His comments came in an interview with The Daily Express as he visited a community centre in Westminster to mark the Universal Credit change.
The taper rate represents the amount in benefits a claimant loses for each pound they earn above a set work allowance.
The changes mean that nearly two million families will keep on average an extra £1,000 a year.
But campaigners said while millions will benefit from the change, at least two million people will not benefit at all because they are either unable to work or don’t earn enough.
Mr Sunak hiked taxes at the Budget in October, with his changes set to push the tax burden to its highest level since Clement Attlee’s post-war Labour government.
The Office for Budget Responsibility has said the tax burden will rise to the equivalent of 36.2 per cent of gross domestic product by 2026/27 under Mr Sunak’s proposals.
The Chancellor tried to defend his credentials as a low-tax Tory as he highlighted the Universal Credit change.
Hy het aan die koerant gesê: ‘This policy coming into force before Christmas is important, because it’s all very well me saying what I want to do. I should be judged on what I am doing.
‘And what I am doing is cutting taxes for millions of the lowest paid people in our society, quite significantly at a time when I think it’s going to make a real difference.
Sunak is determined to end his reputation as a ‘high-tax, high-spend’ chancellor, while Boris Johnson (albei op die foto) also has hopes to be a tax-cutting prime minister
‘And that should give people the confidence they need to know that when I said my goal is to reduce taxes over the course of this Parliament, I mean it – and I’m already getting on and delivering it.’
The Chancellor told broadcasters this week: ‘At the Budget I said that my goal was to reduce taxes in particular so that working people could keep more of their hard earned money and today we are taking the first step in delivering on that pledge with a significant cut to the Universal Credit taper rate coming into force today.
‘This tax cut is going to benefit millions of the lowest paid people in our society… and on average these families will be about £1,000 a year better off.’
The Universal Credit change will mean that a couple with two children, renting their home with one partner working full time and the other working 16 ure per week, will be £1,800 per year better off.
The move was intended to soften the blow of the withdrawal of the £20-a-week uplift which was introduced during the coronavirus pandemic.
Egter, campaigners have warned the change does not compensate for the removal of the uplift – or do anything to help people who are not in work.
Katie Schmuecker, Deputy Director of Policy & Partnerships at Joseph Rowntree Foundation said: ‘This is a tale of two Budgets for families on low incomes.
‘For those in work, the change to the taper rate and work allowance, alongside the National Living Wage increase, are very positive steps, allowing low-paid workers to keep more of what they earn.
‘But the reality is that millions of people who are unable to work or looking for work will not benefit from these changes.’
Mr Sunak also gave his assessment of the current state of the economy as he said there is ‘lots to be positive about’ and that unemployment has been decreasing in the last eight to nine months despite disruption caused by the Covid crisis.