Sunak vows to slash tax burden
Chancellor lays out vision for ‘economic freedom’ but hints at spending cuts
RISHI SUNAK will today publicly commit to lowering UK taxes, declaring the best way to unleash “economic freedom and prosperity” is by letting people keep more of their income.
In a major speech setting out his economic vision, the Chancellor will reject calls to slash taxes now, citing concerns over the cost of borrowing, but he will vow to do so in the years ahead.
The intervention will be seen as an attempt to placate Tory anger over the National Insurance rise in April by underscoring his personal belief in a low-tax state.
It will also be seen as pushing back against the suggestion that he will be painted as a tax-raising Tory by potential leadership rivals should a contest break out to succeed Boris Johnson.
The speech, delivered to the Bayes Business School in London, will see the most detailed articulation to date of what type of economy Mr Sunak wants to create post-pandemic.
He will say: “I firmly believe in lower taxes. The most powerful case for the dynamic market economy is that it brings economic freedom and prosperity. And the best expression of that freedom is for all of us to be able to make decisions about how to save, invest or use the money we earn.
“The marginal pound our country produces is far better spent by individuals and businesses than government.”
Mr Sunak’s declaration will probably be dismissed by critics as lofty promises given that he, as Chancellor, has overseen an increase of the tax burden to its highest point in 70 years.
Mr Sunak was instrumental in convincing Mr Johnson to stick with his plan to raise National Insurance by 1.25 percentage points in April, to pay for NHS backlogs and social care reform.
But the Chancellor will argue that it is not against the Tory credo to seek to control borrowing and spending – which soared during the pandemic – before bringing in tax cuts.
He is expected to reference Margaret Thatcher, the former Tory prime minister, to back up his case, noting taxes first rose under her premiership before being lowered later on.
Mr Sunak will challenge head-on the argument being pushed by some in his party that taxes should be cut now despite the cost of borrowing rising as interest rates increase.
“I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long-term challenges,” Mr Sunak will say. “I am disheartened when I hear the flippant claim that ‘tax cuts always pay for themselves’. They do not.
“Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.”
His swipe at “flippant” calls for tax cuts that pay for themselves will be seen as a rebuke of those in his party calling for tax reductions now.
They include Liz Truss, the Foreign Secretary, and Jacob Rees-mogg, the Brexit minister, who both privately opposed the National Insurance rise when it was adopted last autumn.
The speech is expected to last longer than 30 minutes and offers the clearest glimpse yet into how Mr Sunak would want to shape the economy if he were
‘Cutting tax sustainably requires hard work, prioritisation and difficult arguments elsewhere’
prime minister. The Chancellor is often tipped as a leadership contender by colleagues should attempts by rebel Tory MPS to oust Mr Johnson over claims of lockdown-breaking parties succeed.
There have been newspaper reports that Ms Truss, another MP widely expected to run in any contest, would dub the National Insurance rise the “Rishi tax” and vow to scrap it.
Mr Sunak’s promise to “make difficult and often unpopular arguments” will be seen as a message to his Cabinet colleagues, and No10, that spending must come down for tax cuts to be delivered.
Excerpts from the annual Mais Lecture, an economic address which Chancellors and economists deliver, were circulated by the Treasury last night.
No explicit date was given for when taxes would be cut. Sources indicated it would depend on economic developments.