Rishi plans income tax cut before election
Party’s plea over business rates on eve of SNP Budget
RISHI Sunak is trying to reposition himself as a tax-cutting Chancellor in an attempt to distance himself from Prime Minister Boris Johnson’s spending splurge.
Mr Sunak has told officials to draw up plans to cut income tax south of the Border and slash VAT rates before the next election. A 1p cut in the basic rate of income tax would cost about £6billion 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 1p in 2024 in the run-up to an election. The basic rate in England 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.
Mr Sunak is determined to lose his reputation as a ‘high-tax, highspend’ 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: ‘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.
Any changes the Chancellor makes in income tax will not apply north of the Border, where the Scottish parliament has had the power to set its own rates since 2017.
On Thursday, SNP Finance Secretary Kate Forbes will unveil her Scottish Budget, though any amendments will not be finalised until a Bill passes through parliament by next February.
KATE Forbes has been urged to use a massive cash windfall from the UK Government to protect businesses on the brink of going bust.
The SNP Finance Secretary has been handed a record settlement by Rishi Sunak following the Budget in October.
The £41 billion from the Chancellor represented the biggest increase in funding for the Scottish Government – Covid cash aside – in the history of devolution.
Scots Tories are today demanding she use the money to protect companies from a business rates tax hike on April 1.
The current 100 per cent exemption is due to end on that date, and the Scottish Retail Consortium fears a return to previous levels would put many shops out of business.
The Scots Tories are calling for a full year of 75 per cent rates relief on leisure, hospitality, retail, aviation and newspaper businesses in Thursday’s Holyrood Budget.
They are also backing a freeze on the ‘poundage rate’, used to determine the amount charged, on all premises, estimating that would save businesses in total more than
£600 million over 2022 to 2023.
Scots Tory leader Douglas Ross said: ‘The pandemic has had a catastrophic effect on Scottish businesses. It is absolutely crucial to our economic recovery that the SNP provide adequate business support in their upcoming Budget.
‘Without these reliefs, businesses face a devastating cliff edge in April when existing support measures are set to end.
‘And many Scottish enterprises will simply not survive being hit with this sudden tax bill. Our proposal for a rates reduction of 75 per cent will allow the businesses that have suffered the most to continue to recover and rebuild in 2022.
‘We are also calling on the SNP to commit to undertaking a thorough review of our antiquated business rates system.’
Mr Ross added: ‘The current, outdated system is holding back thousands of Scottish businesses.’
Retailers have been lobbying Ministers in recent weeks for further rates relief. Although they have not asked for a specific figure, they point out that business is still down by up to a fifth on prepandemic levels.
David Lonsdale, director of the Scottish Retail Consortium, said: ‘A formidable alliance of industry bodies and trade unions are asking Ministers to blunt the full 100 per cent reinstatement of business rates, for all retail premises from April, which will be unsustainable for many stores.
‘With retail sales and shopper footfall hovering around 80 to 85 per cent of pre-pandemic levels, we hope the Finance Secretary will act to save stores and the jobs they provide as well as support the vitality of our retail destinations.’
Liz Cameron, chief executive of the Scottish Chambers of Commerce, added: ‘It is critical that the upcoming Scottish Budget focuses on business recovery from the impact of the Covid pandemic – and returning Scotland’s economy not only to pre-pandemic levels of growth, but beyond to make Scotland as attractive and competitive a place for business as possible.
‘Business rates remain the most significant tax burden on our businesses, and our quarterly economic survey consistently highlights rates as a concern from business, most notably from the retail and hospitality sectors.’
Speaking ahead of the Budget, Ms Forbes insisted it would deliver a brighter future for Scots after a difficult two years.
‘This is a critical time for Scotland – we are still in the grip of the pandemic and families and businesses across the country are bearing the brunt of the cost of living crisis,’ she said.
‘However, in these times of crisis, we need to go beyond the norm.
‘While the pandemic may have defined our lives in recent times, the Scottish Government is determined it does not define our future.’
She added: ‘The 2022 to 2023 Scottish Budget that I will present on Thursday is another stepping stone towards a fairer, greener, more prosperous future.’
‘System is holding back thousands of businesses’