Rishi Sunak, a former high-tax chancellor, is believed to have plans to cut income tax by 2p per pound in order to get rid of his bad reputation.
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.
Sunak told officials that they should develop plans to reduce the tax burden, while The Times reported that Conservatives have also considered scrapping the 45p rise in the income tax.
While his preference is to reduce income tax, there are ten options. These include lowering the inheritance tax or charging green energy households 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
Sunak increased taxes to the Budget in Oct., and his modifications will cause the tax burden at its highest point since Clement Attlee’s early 1950s Labour government.
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.
According to a Treasury source, The Times was told by a Treasury official that things were tight. To fulfill our promises to reduce taxes we must be more disciplined in spending.
Sunak could also propose to reduce the headline VAT rate at 20 percent. Meanwhile, the Treasury is working on plans for an increase in the threshold for inheritance tax.
The current threshold stands at £325,000, which increases if it involves properties left to children, with 22,800 estates paying 40 per cent on anything higher. This figure was not adjusted in 2009
Out of all the proposals, there are three that focus on cutting income tax, VAT and inheritance taxes.
According to reports, a Treasury source said that while Covid or inflation might disrupt plans, Sunak as well as the Prime Minister would like the cuts to proceed.
Sunak (pictured) is believed to prefer to reduce income tax. However, ten suggestions were made, including charging lower rates for households that use green energy.
This week the chancellor encouraged voters to have faith that he would keep his promise of tax cuts before next year’s general election.
New changes to Universal Credit were cited by him as proof that he is determined to make more for families.
When he applauded the reduction in Universal Credit’s taper rate of 63p to the Pound to 55p, he stated that “actions speak more than words”.
Sunak claimed that this “should give people all the confidence they need to believe that I meant what I said when I stated my goal to cut taxes over the course if the Parliament”,
He spoke out during an interview with The Daily Express while visiting a Westminster community center to celebrate the Universal Credit changes.
Taper rates are the benefits lost by a claimant for every pound that they earn over a set working allowance.
The changes mean that nearly two million families will keep on average an extra £1,000 a year.
Campaigners claimed that while the changes will be beneficial to millions, it will also benefit approximately two million people who are either unemployed or unable work.
Sunak increased taxes in the Budget on October. With his modifications, the tax burden will reach its highest level ever since Clement Attlee’s Labour government.
Under Mr Sunak’s proposals, the Office for Budget Responsibility said that tax burden would increase to equivalent of 36.2 percent gross domestic products by 2026/27.
As he spoke out about the Universal Credit, the Chancellor attempted to defend himself as a Tory who is low-tax.
The newspaper quoted him as saying that the new policy, which will be in effect before Christmas, is crucial because I can say what I want. What I do should matter.
“And that’s what I do is cut taxes for millions among the lowest paid in our society. This happens quite dramatically at a point when it feels like it would make a significant difference.
Sunak wants to erase his image as a high-tax, highspend chancellor. Boris Johnson, both pictured, hopes to become a tax-cutting prime minster.
“And that should give people confidence that I meant to say that my goal was to lower taxes during this Parliament, and that I am already 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 hours a 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.
Campaigners warn that the changes will not remove the upward mobility – nor do they help those who aren’t working.
Katie Schmuecker, Deputy Director of Policy & Partnerships at Joseph Rowntree Foundation said: ‘This is a tale of two Budgets for families on low incomes.
“The National Living Wage increases and the changes to the taper and work allowances are both positive steps for those who work. They allow low-paid workers to keep more.
“But, the truth is that these changes will not be of benefit to millions who cannot work or are looking for work.
Sunak gave an assessment of the economic situation and said that there was ‘lots’ to be optimistic about. He added that unemployment had been declining in the eight- to nine month period despite disruptions caused by Covid.