Jeremy Hunt dismisses Tory demands for immediate tax cuts
Jeremy Hunt says he ‘agrees’ that taxes are too high but dismisses Tory demands for immediate cuts – and warns there might not be ‘headroom’ to slash the burden before election
Jeremy Hunt today admitted he ‘agrees’ that taxes are too high – but dismissed Tory calls for immediate cuts.
The Chancellor said MPs and businesses were right to be ‘worried’ about the burden the government was having to impose.
But he insisted his immediate priority is to get inflation down, and delivered a stark warning that there might not be ‘headroom’ for a reduction before the next election.
The comments came as Mr Hunt was grilled at the BCC conference of business leaders in London this morning.
Rishi Sunak has been facing mounting pressure from his own backbenches to act on tax, with the overall level heading for a post-war high and growth stagnant.
Chancellor Jeremy Hunt said MPs and businesses were right to be ‘worried’ about the burden the government was having to impose
The OBR confirmed earlier this year that the government’s policies will leave the tax burden at a post-war high
Mr Hunt said: ‘What I would say to people worried about levels of taxation is: I agree with that, we have to get our taxes down, particularly our business taxes down,’ he told the British Chambers of Commerce.
‘But the worst tax of all is inflation, because inflation is tax which you get nothing back for in return.’
Pressed on whether tax cuts could come before the election, Mr Hunt said the Treasury was ‘not in a position to know whether we’re going to have any headroom’.
The Chancellor voiced support for the Bank of England’s squeeze on inflation – still running at over 10 per cent – with interest rates raised to another 15 year high last week.
‘There’s nothing automatic about bringing down inflation. There’s a plan, we are going to stick to it,’ Mr Hunt said.
‘The Bank of England has a role through monetary policy and interest rates, we support them 150 per cent with that.
‘But we have our role in government, what I do on the fiscal side in terms of tax and spend has an influence and if markets judge that we are not getting our borrowing under control they will punish us with higher interest rates.’
Last week a Cabinet minister floated the prospect of income tax being trimmed by 2p.
Work and pensions secretary Mel Stride said he wanted to encourage people back into work to give Mr Hunt the ‘greatest possible flexibility’ at the next Budget.
He has been tasked with coming up with ways to entice the over-50s and others who left the workforce during Covid back into employment.
Mr Stride, speaking at a lunch for political correspondents in Westminster, said it could boost the economy enough to cut income tax.
‘The increase in economic inactivity due to the pandemic was about 650,000 people,’ he said. ‘Now if we can get all of those back into work, it will increase the size of the economy by about 0.2 per cent, which will reduce the borrowing requirement by about £11 billion, which will be enough to take 2p off the basic rate of tax.
Annual CPI inflation came in higher than expected at 10.1 per cent in March
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