More tax cuts are on their way, according to the both the Prime Minister and Chancellor who have written comment pieces in The Sun on Sunday and The Mail on Sunday respectively to indicate their intentions ahead of the upcoming March Budget. This is interesting because their published plans suggest a rise in taxes, to levels not seen in peacetime history. Might they be about to change their mind?
The Prime Minister used an outing to Hampshire to give the green light to tax cuts at ‘future events when we can responsibly do so’, while the Chancellor used his trip to Davos to say that a lower tax burden was ‘the direction of travel we would like to go in’. Their comments were flagged as an indication of intent, if the public finances would allow for more tax cuts.
That subtlety has fast evaporated. It’s only taken a few days for both Sunak and Hunt to double down on their comments. Sunak is using the opportunity to push the government’s new favourite line – that the public should ‘stick to the plan’ that has halved inflation – which, he says this morning, will lead to ‘tax cuts with me or tax rises with Starmer’. For point of reference, here’s the OBR’s assessment of the current “direction of travel”:-
Hunt’s comment piece touches on the same points as the Prime Minister’s, but he goes slightly further on the tax pledge. ‘Because of our careful management of the economy,’ says Hunt, ‘we can start cutting taxes again in a way is both affordable and boosts our growth’ – a point that seems to be about past and future decision making, as he notes that the 2p cut to employee National Insurance last year means we are ‘starting this month with a tax cut for 27 million people worth £450 to a worker on the average salary.’