Jeremy Hunt ramps up expectations of tax cuts at his Autumn StatementNovember 19, 2023
Jeremy Hunt ramps up expectations of tax cuts at his Autumn Statement as Chancellor admits burden is ‘too high’ and lower levies are needed for a ‘fizzing’ economy – but he cools talk of income tax cut, saying: ‘Rome wasn’t built in a day’
Jeremy Hunt today ramped up expectations that tax cuts are coming at his Autumn Statement as he admitted the burden on businesses and families is ‘too high’.
The Chancellor, who will deliver his latest fiscal package on Wednesday, admitted bringing down levies was ‘important for a productive, dynamic, fizzing economy’.
It has been widely reported that Mr Hunt will slash the rate of inheritance tax at the Autumn Statement, while he is also expected to cut taxes for small businesses.
But it has now been claimed both the Chancellor and Prime Minister Rishi Sunak are weighing up a last-minute decision to cut income tax or national insurance.
The Treasury is reported to have been boosted by improved public finances that have seen Mr Hunt’s ‘headroom’ for spending grow to about £25billion.
Although the Chancellor today refused to confirm any measures ahead of his Autumn Statement, there was a marked change of language from comments in September when he said tax cuts would be ‘virtually impossible’.
In a round of TV and radio interviews this morning, the Chancellor said ‘everything is on the table right now’ and stressed that lower taxes were ‘essential to economic growth’.
Yet he was coy about the possibility of immediate cuts to personal taxes – such as income tax – by stressing lower taxes are ‘not going to happen overnight’ and ‘Rome wasn’t built in a day’.
Jeremy Hunt ramped up expectations that tax cuts are coming at his Autumn Statement as he admitted the burden on businesses and families is ‘too high’
It has been claimed both the Chancellor and Prime Minister Rishi Sunak are weighing up a last-minute decision to cut income tax or national insurance
The PM was boosted this week by latest figures that showed the rate of inflation fell to 4.6 per cent last month, which was down from 6.7 per cent in September
Chancellor facing backlash from ‘Red Wall’ Tory MPs if he favours slashing inheritance tax over other cuts
Jeremy Hunt was today warned he faces a backlash from ‘Red Wall’ Tory MPs if he favours a cut to inheritance tax at the Autumn Statement.
It had been widely reported that the Chancellor would slash the rate of inheritance tax – by as much as half – on Wednesday.
But it has now been claimed this measure will not be introduced before Mr Hunt’s Spring Budget or the Conservative election manifesto.
Tory backbenchers from ‘Red Wall’ areas have urged the Chancellor not to prioritise action on inheritance tax ahead of other measures to bring down the burden on families and businesses.
John Stevenson, chair of the Northern Research Group of Tory MPs, told the Observer: ‘I am all for reforming tax and inheritance tax needs reforming.
‘However at this time any tax cuts should be aimed at helping businesses or the lower paid.’
Jonathan Gullis, a former minister and MP for Stoke-on-Trent North, said: ‘While long term this [inheritance tax] should be eventually abolished, now is not the right time for this tax cut.
‘Instead, we should be looking at cutting the basic rate of income tax [and] increasing the 40p tax threshold to help families really feeling the pinch.’
He added that Mr Hunt should ‘go for growth’ by increasing tax breaks for small businesses and the self-employed.
Tory West Midlands mayor Andy Street, when asked about a possible cut to inheritance tax, told the BBC: ‘It would not be my personal choice of where at this time one should invest any headroom that there is.’
Mr Hunt and Mr Sunak are under intense pressure from Tory MPs to cut tax levels – which are at their highest since records began 70 years ago – in an effort to boost the Conservatives’ dire opinion poll ratings ahead of the general election.
The PM was boosted this week by latest figures that showed the rate of inflation fell to 4.6 per cent last month, which was down from 6.7 per cent in September.
It allowed Mr Sunak to claim he had met one of his five priorities for his time in No10, which was to halve the rate of inflation.
Appearing on Sky News’ Sunday Morning with Trevor Phillips programme, Mr Hunt insisted he would only bring down the tax burden ‘responsibly’ and remained focused on tackling the cost-of-living crisis.
‘The one thing we won’t do is any kind of tax cut that fuels inflation,’ he said. ‘We’ve done all this hard work. We’re not going to throw that away.
‘But in an Autumn Statement for growth, because I do want to turn the corner… if we’re going to embrace those opportunities, we need to remove the barriers that stop businesses growing, and that’s why this Autumn Statement will be focused on growth.’
The Chancellor acknowledged that ‘lower tax is essential to economic growth’, adding: ‘I want to bring down our tax burden. I think it’s important for a productive, dynamic, fizzing economy that you motivate people to do the work, to take the risks that we need.’
But, commenting on possible changes to personal taxes, Mr Hunt cooled expectations of immediate action.
‘We need to show there is a path to a lower tax economy,’ he said. ‘If you want to bring down personal taxes the only way to do that sustainably is to spend public money efficiently.
‘Rome wasn’t built in a day. These things take time.’
He also told Times Radio: ‘I want to show people there’s a path to lower taxes. But we also want to be honest with people.
‘This is not going to happen overnight. It requires enormous discipline year in, year out.’
Speaking later to the BBC, Mr Hunt hailed the halving of inflation from more than 10 per cent at the beginning of this year as ‘significant’.
‘We do recognise things are tough. We’re not out of the woods yet,’ he told the Sunday with Laura Kuenssberg programme.
‘But I think it is also the case, as we focus on growth, that there’s too much negativity about the British economy.
‘There is a sort of defeatism. Actually, when you look at it, there’s a lot going for it.’
Despite widespread reports that Mr Hunt will cut inheritance tax at the Autumn Statement, it has now been claimed this measure will not be introduced before the Spring Budget or the Conservative election manifesto.
It comes as Tory MPs in ‘Red Wall’ seats warn the Chancellor not to prioritise action on inheritance tax over tax-cutting in other areas.
Labour shadow chancellor Rachel Reeves today hit out at possible Government plans to cut inheritance tax amid the continued squeeze on household budgets.
She demanded lower taxes for ‘working people’, but admitted they would have to be ‘affordable’.
Labour shadow chancellor Rachel Reeves hit out at a possible cut to inheritance tax at the Autumn Statement, amid the continued squeeze on household budgets
Not many estates pay inheritance tax, but the receipts are expected to rise sharply
Mr Hunt and Mr Sunak are under intense pressure from Tory MPs to cut tax levels in an effort to boost the Conservatives’ dire opinion poll ratings ahead of the general election
Ms Reeves told Sky News: ‘We are in the middle of a massive cost-of-living crisis and cutting inheritance tax – which benefits less than 4 per cent of estates each year – that seems an unusual way to tackle the scale of the cost-of-living crisis that we have right now.
‘On the other hand, I make no apology for wanting taxes on working people to be lower.’
She added: ‘This Government, since 2019, have raised taxes 25 times. We now have the highest tax burden in 70 years.
‘So, lower taxes on working people, if the Government can explain where the money is going to come from, that is something that I would support.
‘I want taxes on working people to be lower, but it has to be affordable.’
Any tax cuts announced by Mr Hunt on Wednesday could be funded by reductions to benefits.
The Chancellor is said to be considering using last month’s inflation figure of 4.6 per cent to set the increase for working-age benefits next year.
This would be instead of using September’s figure of 6.7 per cent, which is the figure traditionally used for uprating welfare payments.
Ahead of his Autumn Statement, Mr Hunt has already announced a fresh welfare crackdown as part of his push to get people back into work.
Ms Reeves said Labour would raise benefits in line with September inflation figures if elected.
Asked by the BBC if she believed benefits should continue to rise with the level of inflation from September, the shadow chancellor said: ‘Yes, I do.’
She added: ‘If you pick and choose from year to year which inflation number is the cheapest thing to do, then what you see is the gradual erosion of people’s incomes.’
Senior Tory backbencher Sir John Redwood today called for Mr Hunt to cut the ‘tax on effort’ if he can find room in the public finances.
‘Cut energy taxes to get inflation down faster, helping everyone,’ he said ahead of the Autumn Statement.
‘Cut taxes on the self employed and small business to boost jobs and growth. If there is any more scope cut the basic rate of income tax which is a tax on effort.’
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