Rishi Sunak, who is running for British prime minister, has pitched for a 20% cut in basic income tax from 2029, with the former finance minister throwing a dangerous political gamble.
Sunak, who was seen as the favorite to replace Boris Johnson when he helped steer the economy amid the problems caused by the COVID-19 pandemic, is now fighting against his main internal party rival, Foreign Secretary Liz Tras, which has promised an immediate reduction in taxation.
Sunak said he is focusing his attention on tackling inflation, and when that goal is achieved, he will be able to follow through on a plan already announced to cut taxes in 2024, but also with the end of the next parliamentary term around in 2029.
Mr Sunack said his plan would be the biggest income tax cut since Margaret Thatcher.
“This is an extreme vision, but it is also realistic,” he said in a statement yesterday, a day before Conservative Party members began receiving their ballots to vote for the party’s new leader.
Britain’s political battle to choose a new prime minister was activated on July 7 when Johnson was forced to announce his resignation after months of scandal. Conservative MPs reduced the number of candidates to two, Tras and Sunak.
With inflation rising to its highest rate in years (9.4%) and growth slowing, the economy dominated the early stages of the party’s selection process, with Sunak arguing that Tras’ plan to reverse an increase in social security contributions and to cancel a planned increase in corporate tax, will further fuel the rise in inflation.
Mr Sunack said every minute of the pound deducted from income tax would cost around £6bn a year and would allow Britain’s debt-to-GDP ratio to fall further if the economy continues to grow in line with with the official forecasts.
Truss has argued that tax cuts are needed now to give the economy a boost. A recent poll (YouGov) of Conservative Party members showed Trass ahead of Sunak by 24 points.
Source: AMPE
Source: Capital
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