Prime Minister Rishi Sunak, facing doubters, has confidently promised tax cuts and stated he is “totally up for the fight” against Labour. Declaring that hard work should be rewarded with tax reductions, Mr Sunak wants to reverse his party’s slump in opinion polls against Labour with a pre-election giveaway and an improved economic outlook.
His renewed vow to cut taxes when it’s “responsible to do so” comes after his own tax summary – recently made public – showed he paid over £500,000 in UK taxes last year. His total income hit £2.2million which led critics to highlight that despite earning millions more, his effective tax rate of about 23 percent was the same as a teacher’s.
This is because a majority of his earnings came from capital gains, taxed at a lower rate than income. Forecasts suggest that next week’s official numbers may show the UK fell into a technical recession late last year, putting a damper on Mr Sunak’s promise to stimulate economic growth.
However, during a chat with The Times, the Tory leader remained hopeful, suggesting that the UK could exceed expectations once again. He told the newspaper: “At the beginning of this year there is a sense that the country is pointing in the right direction.”
He added, “Because economic conditions have improved, because the plan is working, you are starting to see mortgage rates come down and we have been able to cut taxes.
“I do believe those pressures are starting to ease and that hopefully over the course of this year we can continue to make even more progress.”
Chancellor Jeremy Hunt previously made a bold move in November by announcing a cut in national insurance by two percentage points, from 12 percent to 10 percent.
Despite this, many economists criticised his autumn statement, suggesting that it included unrealistic squeezes to public spending. Equally critical was the International Monetary Fund, which warned against further tax cuts in Mr Hunt’s March 6 Budget due to the risk it carries for the Government’s ability to invest in vital services such as the NHS.
Last week, Mr Hunt attempted to manage expectations about the size of tax reductions in his upcoming Spring Budget. This cautionary approach is also shared by the Prime Minister, who commented: “None of us ever talk about this stuff before budgets.
“Other people are. I think they’re over-interpreting. What the Chancellor and I have said is that of course our long-term plan is to cut people’s taxes.”
In face of rumours that the forthcoming Budget could see another National Insurance cut, Mr Sunak voiced that “cutting national insurance is a very direct way” to reward hard work.
