Rishi Sunak draws up plans for a 2p income tax cut before next General Election – and tells officials he also wants to slash VAT and inheritance tax
- Rishi Sunak, 41, is attempting to reposition himself as a tax-cutting Chancellor
- He has told officials to draw up plans to cut income tax and slash VAT rates
- Chancellor could cut the basic rate of income tax by 1p in 2023 and 2024
Mr Sunak has told his officials to draw up detailed plans to cut income tax, slash VAT rates and cut inheritance tax before the next General Election. A 1p cut in the basic rate of income tax would cost about £6 billion a year and would help 31 million people.
Under one proposal, Mr Sunak could cut the basic rate of income tax by 1p in 2023 and 2024 in the run-up to an Election. The basic rate would fall from 20p to 18p in the pound, worth up to £750 a year to taxpayers.
The Tories are also considering scrapping the 45p higher rate of income tax in their next manifesto, according to The Times. The VAT cut would be to the headline rate of 20 per cent, along with more targeted reductions.
Rishi Sunak has told his officials to draw up detailed plans to cut income tax, slash VAT rates and cut inheritance tax before the next General Election
Under one plan being considered, households using green energy could also pay lower rates.
A Conservative MP said last night: ‘The party and the country will be very happy if these things are indeed happening, particularly if it’s part of a wider strategy that’s focused around low tax, high growth and innovation. Ultimately, as a Chancellor you are judged by actions.’
Mr Sunak is determined to lose his reputation as a ‘high-tax, high-spend’ Chancellor as the country attempts to move on from Covid.
In his Budget speech in October, Mr Sunak said it was his ‘mission’ to cut taxes – despite announcing a rise to National Insurance that will take the tax burden to its highest in 70 years.
He also said: ‘My goal is to reduce taxes. By the end of this Parliament, I want taxes to be going down not up.’
Soon after delivering the Budget, Mr Sunak told Treasury officials to review the tax burden and find ways to cut the load for working families.
Under one proposal, Mr Sunak could cut the basic rate of income tax by 1p in 2023 and 2024 in the run-up to an Election
The Tories are also considering scrapping the 45p higher rate of income tax in their next manifesto, according to The Times
A dozen options were drawn up and more detailed work is being carried out on a handful of them, including cutting income tax, VAT and inheritance tax. The Chancellor is said to prefer the income tax option, according to The Times.
However, a Treasury source last night pointed to several caveats, including what happens with the Omicron Covid variant and inflation, which could affect the plans.
Paul Johnson, head of the Institute for Fiscal Studies think tank, said cutting income tax after increasing National Insurance to fund health and social care would be ‘indefensible’.
He said: ‘To introduce the health and social care levy, which essentially only affects workers, then to cut income tax, which also benefits people who receive their income from rent, occupational pensions and other holdings, discriminates in favour of the wealthy.’
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Brits are crying out for the Chancellor to cut their taxes. With the burden at a 73-year high, Rishi must do more than simply seek to offset the Tory tax rises we’ve seen over the last decade.’