Rishi Sunak And Jeremy Hunt To Defy Tory MPs Demanding Tax Cuts

In the early weeks of his premiership, Rishi Sunak earned a well-deserved reputation for trying to avoid any clashes with Tory backbenchers.

On issues like onshore wind farms and housebuilding targets, the prime minister decided he would rather U-turn than pick a fight with his own rebellious MPs.

Now, it would seem, the gloves are coming off.

Chancellor Jeremy Hunt will deliver his first Budget next Wednesday and – with the PM’s blessing – will decisively reject the loud and persistent demands from Tory MPs that it must include tax cuts.

Among those who want to see tax rates come down are Sunak’s two immediate predecessors, Liz Truss and Boris Johnson.

In a speech earlier this month, Johnson called for corporation tax rates – which are due to rise from 19p in the pound to 25p in April – to be cut to “Irish levels or lower”.

That echoed calls for corporation tax to come down from Liz Truss, who criticised Sunak’s economic plans in a 4,000-word Sunday Telegraph article in February.

Meanwhile, the Conservative Growth Group – of which Truss is a founding member – has delivered a dossier to the chancellor calling for tax cuts in the Budget.

But despite their lobbying, Hunt and Sunak are determined to stick to the plan set out in last November’s autumn statement, which stressed the need to bring down inflation before reducing taxation could even be contemplated.

Liz Truss and Boris Johnson want to see taxes coming down.

Aaron Chown via PA Wire/PA Images

One ally of the chancellor told HuffPost UK: “Our overwhelming and overriding priority is to halve inflation, which is the biggest barrier to economic growth and raising living standards. You can’t grow the economy when inflation is at 10%.

“Additional borrowing to fund a spending splurge or tax cuts would fuel inflation further.

“The best tax cut right now is a cut in inflation, because that is a more insidious tax which eats into people’s savings as well as pushing up the cost of mortgages and business loans.”

In an interview with GB News to be broadcast today, Hunt reiterated his desire to bring taxes down – just not yet.

He said: “If you’re saying to me, is it my ambition for us to have the most competitive business tax rates? Do I want to make progress? Yes, I do.

“We believe in bringing tax rates down. But all I would say is you have to do so in a framework that is responsible for public finances. It has to be done in a responsible way.”

Whitehall sources expect a “steady as she goes” Budget, with little in the way of major announcements.

Measures designed to encourage over-50s to return to the workplace will be announced, as will a freeze in fuel duty and a three-month extension of the energy price guarantee to help people cope with soaring bills.

But Treasury sources rejected the findings of a report by the National Institute for Economic and Social Research, which suggested Hunt may have an extra £100 billion available to him as higher inflation pushes up tax revenues.

“We genuinely think they put a decimal point in the wrong place when they were doing their calculations,” one source told HuffPost UK.

Hunt himself may have to come up with some particularly creative accounting of his own if he is to eventually satisfy the Tory tax-cutters lurking on the backbenches.

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