UK Prime Minister Rishi Sunak said his government would turn to tax cuts once inflation falls, speaking ahead of this week’s Budget update when Treasury Secretary Jeremy Hunt was expected to announce how he would boost the stagnant economy.
Rishi Sunak noted on Monday:
Now that inflation is halved and our growth is stronger, meaning revenues are higher, we can begin the next phase and turn our attention to cutting tax.
Sunak said his government had to prioritise reducing the tax burden. He emphasised that he would not repeat the unfunded tax cut plan that his predecessor Liz Truss announced last year, which caused turmoil in bond markets. Sunak said the government would cut taxes gradually and would not do anything that would increase inflation. He added:
You can trust me when I say we can responsibly start to cut taxes.
Last week’s data showed that inflation fell to 4.6 per cent in October. That allowed Sunak to claim he had fulfilled his promise to voters to cut price increases in half this year, even if much of that reduction was due to the effect of comparisons to last year’s spike in gas prices.
Conservative lawmakers have long urged Sunak to cut taxes to narrow the gap in opinion polls with the opposition Labour Party ahead of elections expected next year.
Many conservatives are also angered by a series of tax hikes imposed by the government to stabilise public finances after economic turmoil caused by soaring energy prices and a coronavirus pandemic. But his pledge on Monday may not unite Sunak’s fractious party after one of his other key promises – tackling illegal immigration – was almost derailed by a Supreme Court ruling last week that cancelled a deal to bring asylum seekers to Rwanda.
In his speech, he sought to draw attention to Labour’s plans to borrow billions of pounds each year to fund investment in Britain’s zero-income economy. Sunak said:
This makes the same economic mistake as last year’s mini-budget. Blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.
Sunak did not give any specific comments on what taxes his government intended to cut.
