Ishy Sunak has indicated that tax cuts will not be announced in the budget as his administration focuses on reducing the “regressive tax” of inflation.
The Prime Minister said that the government’s priority is to reduce the rate of inflation and reduce the cost of living crisis gripping the UK.
Senior Conservatives are pushing Chancellor Jeremy Hunt to use his budget next week to announce tax cuts to stimulate Britain’s stalled economy.
Mr Hunt has been encouraged by MPs including former prime minister Boris Johnson to block a planned increase in corporation tax, which is due to rise from 19% to 25% in April.
Inflation is a regressive tax and this is what is causing problems to everyone at the moment, so it is really only right that we focus on reducing inflation
But, in one of the clearest signs so far that the budget will shy away from tax breaks, Mr Sunak insisted the “number one economic priority” was to reduce inflation.
At the start of the year, the prime minister listed the target of halving inflation, which according to some metrics is 10%, as one of his top five priorities ahead of the next general election.
Speaking to reporters on the Eurostar in Paris for a UK-France summit on Friday, Sunak said he agreed with former Tory prime minister Margaret Thatcher that inflation was “the worst tax of all”.
Asked whether he was in favor of tax cuts in the budget if the economic picture improved, the former chancellor said he was “very clear that my ambition is to cut people’s taxes”.
But he added: “I think people recognize that Covid and now a war in Ukraine, and the impact that has had, has had a huge detrimental effect not only on the economy but on our public finances. I think everyone understands it.”
Describing the UK government’s economic priorities as reducing inflation, reducing debt and growing the economy, Mr Sunak said he was confident the chancellor would “deliver them all” on Wednesday.
The Prime Minister continued: “I know that the number one economic priority is reducing the burden on the cost of living.
“It means that reducing inflation is important because I want this case to stop that people are opening their bills every week, every month and see them grow at this rate.
That’s why our plan to reduce inflation is very important. Inflation, as Margaret Thatcher described it, is the worst tax of all.
“Inflation is a regressive tax and that is what is causing everyone problems at the moment, so it is really only right that we focus on reducing inflation.
“Our plans are working and it is important that we stick to them.”
Meanwhile, Mr Hunt is expected to announce in his budget that promoters of tax avoidance schemes could face jail terms.
The Treasury said the chancellor wants to crack down on marketing schemes claiming to reduce people’s tax liabilities, which are costing the UK £400 million a year and land users with unexpected bills and penalties.
Mr Hunt said: “It is everyday people who lose out from tax evasion, whether that person is facing huge bills after being involved in harmful schemes or having money siphoned off public services.
“That is why I am determined to face the music for promoters that cause harm and harm lives, stopping them in their tracks.”
HMRC already warns taxpayers over dozens of avoidance schemes and their promoters, and imposes fines on those who refuse to stop them.
The chancellor is expected to go ahead with announcing a consultation, which could result in the promoters facing criminal charges.
The Office for National Statistics (ONS) announced on Friday that the economy grew by 0.3% in January, reducing fears of a possible recession.
Mr Sunak said the development showed that “the underlying fundamentals of the economy remain strong”.
Separately, the prime minister said he would make his tax returns public “soon” but would not confirm whether this would happen before Budget Day.
“We’ll have them soon,” he said.
“As you know the tax year ended on January 31st. I’ve been a bit busy the past few weeks, so that’s the only reason. But they’ll be published shortly.
Credit: www.standard.co.uk /