Truss pledges to cut taxes in emergency budget if she becomes prime minister
Liz Truss has pledged to cut taxes “immediately” if she wins the race for No 10, accelerating the reversal of the National Insurance rate hike by six months.
The Tory leadership favorite has said she will use a September emergency budget to scrap the increase brought in by her rival Rishi Sunak when he was chancellor.
It would seek to implement the change within days, rather than waiting until April under normal Treasury rules, it is understood.
But Mr Sunak contrasted his ‘clear-eyed realism’ with Ms Truss’ ‘star-eyed boosterism’, arguing that his promised tax cuts would further fuel inflation and fail to help the most vulnerable.
The two candidates vying to replace Boris Johnson as Prime Minister continue to clash over their plans to help households cope with spiraling bills after the Bank of England warned the UK would fall in the longest recession since the financial crisis, with inflation expected to climb to more than 13%.
There are growing calls for the new Prime Minister to urgently increase the amount of help available to the most vulnerable families, with a new report commissioned by former Prime Minister Gordon Brown suggesting the government aid did not meet their needs.
Ms Truss pledged to tackle the cost of living crisis ‘immediately’ by easing the tax burden.
“Despite the Bank of England’s harsh assessment this week, I do not believe we should step down from our great country for a controlled decline or accept the inevitability of a recession,” the Foreign Secretary wrote. in the Sunday Telegraph.
“I would start launching an emergency budget, charting a firm course to grow our economy to help fund our public services and the NHS.
“I would use this to immediately tackle the cost of living crisis by cutting taxes, reversing the National Insurance hike and suspending the green levy on energy bills.”
The Foreign Secretary had previously insisted that tax cuts, not “handouts”, would help families whose fuel bills soar this winter.
She told the Financial Times: “Of course I will look at what more can be done.
“But the way I would do things would be in a conservative way to reduce the tax burden, not hand out handouts.”
Mr Sunak hit back at his comments saying: ‘It is simply wrong to rule out further direct support at this time as Liz Truss has done, and furthermore her tax proposals will not help in a very meaningful way. people like retirees or people on low incomes who are exactly the kind of families who are going to need help.”
But Trade Minister Penny Mordaunt denied that Ms Truss had ruled out extending direct payments to people.
Ms Mordaunt, a former Tory leadership candidate who has now thrown her weight behind the Foreign Secretary, told Sky News: ‘It’s not that she rules out future aid, it’s a misinterpretation of what she said.
“What she envisions is allowing people to keep more of the money they earn.
“It makes no sense to take money from people and then give it back in a very, very complicated way.
“We need to simplify this and we need to make sure that households are as resilient as possible and stopping levying large sums of personal tax is one way of doing that.”
Ms Mordaunt also said Ms Truss was ‘right’ to present an emergency budget, ‘both in terms of addressing the cost of living issues, but also to really kick-start growth in the economy’.
“It’s all very well to alleviate a problem and the pressure that people are feeling, but we need to bring growth back into the economy if we don’t want this to become the norm.”
She also argued that tax cuts “do not have to be inflationary”, in response to Mr Sunak’s argument that tax cuts would drive prices up further.
In an interview with The Times, Mr Sunak said: “The priority for me is not to do things that make it worse and I think putting over £40billion and borrowing money in an economy experiencing an inflationary spiral is likely to make it worse.
“It may be fine, but I think it means taking a bet with people’s savings, their pensions, their mortgage rates, it’s not a bet I’m willing to take, so I don’t want to not make matters worse.”
The former chancellor told the newspaper that the public deserved “lucid realism and not blind boosterism”.
Both candidates have faced calls from Mr Brown to agree an emergency budget with Mr Johnson this week or risk ‘sending millions of vulnerable, blameless children and pensioners to a winter of poverty extreme”.
“The reality is grim and undeniable: A financial time bomb will explode for families in October as a second fuel price hike in six months sends shockwaves through every home and pushes millions to the brink. from the abyss,” the former prime minister wrote in Sunday’s Observer. .