Rishi Sunak “plans to cut income tax by 2 pence a pound or lower VAT before next election”

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Rishi Sunak reportedly intends to cut income tax by 2 pence to the pound before the next election, as he hopes to end his reputation as a “high tax” chancellor.

The Chancellor of the Exchequer, 41, plans to cut income taxes over the next three years, ahead of the next general election in 2024.

Sunak has asked officials to come up with plans that will reduce the tax burden while the Tories also consider removing the 45 pence increase in income tax, according to the Times.

His preferred plan would be to reduce income tax, but ten proposals have been made in total, including lower inheritance taxes and lower tariffs for households using green energy.

It comes after the chancellor urged voters to believe he will keep his promise to cut taxes before the next general election, as he said “actions speak louder than words.”

Rishi Sunak reportedly intends to cut income taxes over the next three years, ahead of the next general election in 2024, as he hopes to end his reputation as a “high tax” chancellor.

Mr Sunak raised taxes in the October budget, his changes expected to bring the tax burden to its highest level since Clement Attlee’s postwar Labor government in the early 1950s.

But Sunak is determined to end his reputation as a “high tax, high spend” chancellor, while Boris Johnson also hopes to be a tax-cutting prime minister.

Amid reports of his income tax plans, Sunak has reportedly told his colleagues that there will have to be tighter limits on government spending if tax cuts can go ahead.

A source from the Treasury told The Times: “But things are tight and in order to keep our promise to cut taxes, we need to be disciplined when it comes to spending.”

Another proposal could see Sunak cut the VAT rate by 20%, while the Treasury works on plans to raise the threshold for inheritance tax.

The current threshold stands at £ 325,000, which increases if it is property left to children, with 22,800 estates paying 40% on anything higher. The figure has not been adjusted since 2009.

Of the ten proposals that have been developed, it is understood that more in-depth work is underway on three plans, focused on reducing VAT, income tax and inheritance tax.

A Treasury source has reportedly said that although plans may be disrupted by Covid and inflation, Sunak and the Prime Minister want the cuts to continue.

Sunak's preferred plan (pictured) would be to cut income tax, but ten proposals have been made, including billing households using green energy at lower tariffs.

Sunak’s preferred plan (pictured) would be to cut income tax, but ten proposals have been made, including billing households using green energy at lower tariffs.

Earlier this week, the Chancellor urged voters to believe he would keep his promise to cut taxes before the next general election.

He pointed to the new changes to the universal credit system as proof that he wants to do more to help families.

He said “actions speak louder than words” as he welcomed the decision to cut the universal credit cut rate from 63 pence a pound to 55 pence.

Sunak said that “should give people the confidence they need to know that when I said my goal is to cut taxes in this Parliament, I really mean it.”

His comments came in an interview with The Daily Express as he visited a community center in Westminster to mark the Universal Credit Change.

The graduated rate represents the amount of benefit a claimant loses for each pound he earns above a defined working allowance.

The changes mean that almost two million families will keep on average an additional £ 1,000 a year.

But activists have said that while millions of people will benefit from the change, at least two million people will not benefit at all because they are unable to work or do not earn enough.

Mr Sunak raised taxes in the October budget, his changes expected to bring the tax burden to its highest level since the post-war Labor government of Clement Attlee.

The Office for Budget Responsibility said the tax burden will reach the equivalent of 36.2% of gross domestic product by 2026/27 according to Sunak’s proposals.

The Chancellor tried to defend his credentials as a low-tax conservative by highlighting the change in universal credit.

He told the newspaper: “This policy which comes into effect before Christmas is important because it is very well me saying what I want to do. I should be judged on what I do.

“And what I’m doing is cutting taxes for millions of the lowest paid people in our society, quite significantly at a time when I think it’s going to make a real difference.

Sunak is determined to end his reputation as Chancellor

Sunak is determined to end his reputation as a “high tax, high spend” chancellor, while Boris Johnson (both pictured) also hopes to be a tax-cutting prime minister.

“And that should give people the confidence they need to know that when I said my goal is to cut taxes during this Parliament, I mean it – and I’m already going on it and I’m delivering it. . “

The Chancellor told broadcasters this week: “When budgeting I said my goal was to cut taxes in particular so workers can keep more of their hard-earned money and today we are doing the first step towards fulfilling this commitment with a reduction at the declining rate of universal credit entering into force today.

“This tax cut will benefit millions of the lowest paid people in our society… and on average these families will earn around £ 1,000 a year.”

The universal credit shift means that a couple with two children, renting their home with one partner working full time and the other working 16 hours a week, will earn £ 1,800 a year.

The move was intended to soften the blow of the withdrawal from the £ 20 per week increase that was introduced during the coronavirus pandemic.

However, activists have warned that the change does not offset the removal of the hike – nor does anything to help people who are not working.

Katie Schmuecker, deputy director of policy and partnerships at the Joseph Rowntree Foundation, said: “This is the story of two budgets for low income families.

“For those who are working, changing the progressive rate and work allowance, along with increasing the national living wage, are very positive steps, allowing low-paid workers to keep more of what they earn. they win.

“But the reality is that millions of people unable to work or looking for work will not benefit from these changes.”

Mr Sunak also gave his assessment of the current state of the economy as he said there were “a lot of bright spots” and unemployment has declined over the past eight to nine months despite the disruption caused. by the Covid crisis.


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