Rishi Sunak said he wants to cut UK taxes — but only once he’s got a handle on inflation and borrowing — as he sought to allay concerns in his Conservative Party about the current burden on British households.
(Bloomberg) — Rishi Sunak said he wants to cut UK taxes — but only once he’s got a handle on inflation and borrowing — as he sought to allay concerns in his Conservative Party about the current burden on British households.
“We’ve got to get inflation down first, get borrowing under control, and then we’ve got the sound fundamentals to cut taxes,” the UK prime minister said on Thursday in an interview with the ConservativeHome website. “That’s what I know everyone would like us to do, and that’s what we want to deliver.”
Under Sunak and Chancellor of the Exchequer Jeremy Hunt, the UK’s tax burden has risen to its highest level since World War II as they seek to repair the public finances after massive pandemic-era spending and the confidence knock caused by the disastrous tenure of former premier Liz Truss.
But that has riled rank-and-file Tories, who fear a backlash from voters suffering during a cost-of-living crisis. It’s why Sunak, who repeatedly calls himself a “low-tax Conservative,” is expected to cut taxes before a general election due by January 2025 at the latest.
The prime minister has said his five priorities include halving inflation this year and reducing national debt.
Inflation has been stubbornly high in the UK, spurred by rising energy prices due to Russia’s war in Ukraine and a tight labor supply linked to Brexit and the after-effects of the pandemic. The Bank of England has hiked interest rates from 0.1% to 4.25% since December 2021 in response, with markets expecting a further quarter-point increase next month.
This week Hunt said forecasters including the Bank of England and International Monetary Fund believe the UK economy will have “really turned the corner” in a year’s time, paving the way for a general election as soon as May 2024.
Sunak said his government has already announced some tax cuts for businesses, including a temporary 100% tax relief on investment spending revealed by Hunt at the budget last month. However, his administration has also hiked corporation tax — a levy on corporate profits — from 19% to 25%.
“We want to make sure we can lower taxes over time,” Sunak said. “The UK is one of the most tax-generous places to invest anywhere in the world.”
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