Sunak Resists Calls for Pre-Election Tax Cuts Ahead of Tory Conference

Prime Minister Rishi Sunak leaves Media City in Salford, Manchester, England, on Oct. 1, 2023. (Stefan Rousseau/PA)

Prime Minister Rishi Sunak has resisted calls from senior Tories to cut taxes before the next general election.

Speaking to broadcasters ahead of the Conservative Party annual conference on Sunday, current and former ministers Michael Gove and Dame Priti Patel suggested voters need to feel lighter tax burden before the election, but Mr. Sunak refused to make the commitment, insisting the current priority is to halve inflation, which stood at 6.3 percent in August.

It comes after a forecast suggested the UK is heading towards the biggest tax burden on record by the time of the next election, and this Parliament would have seen the biggest tax hike than any other since the Second World War.

While Chancellor of the Exchequer Jeremy Hunt has repeatedly said there’s no room for tax cuts in his autumn budget, there’s still hope that taxes can be slashed next spring.

Senior Tories: Slash Taxes Before Election

Mr. Gove, the secretary of state for levelling up, housing, and communities, told Sky News he wants to see the tax burden reduced “before the next election.”

The minister suggested he would like to first see income tax on the chopping board.

“My own view is, wherever possible, we should cut taxes on work. In other words, we should incentivise people to work harder, we should make sure they are better rewarded for the enterprise, the effort, the endeavour that they put in,” he said.

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However, he later told a Conservative party conference fringe event hosted by the Centre for Policy Studies that ministers can only cut taxes “if we have tackled inflation.”

Former home secretary Dame Priti said she wants to see income tax cut and inheritance tax scrapped.

“It is now October, there will be fiscal events coming up,“ she told Sky News’s ”Sunday Morning With Trevor Phillips” programme.

“For the public to feel an absolute tangible change and difference, we’ve got to work on this sooner.”

Regarding inheritance tax, the former minister said, “I think it needs reforming—quite frankly I’d rather see it go, and I’ve said that many times. It is a regressive and a punitive tax.”

Sunak: Inflation Is a Tax

The prime minister told broadcasters he wants to cut taxes but has to prioritise bringing inflation back down.

Asked if he would commit to cutting taxes before the general election, the prime minister said, “I’m a Conservative, I want to cut taxes” but “the best tax cut that we can give working people is to halve inflation.”

Earlier in the interview, Mr. Sunak said, “Inflation is a tax. It’s a tax that impacts the poorest people the most.”

“Economically, the impact that it has on people is to eat into their pockets. It eats into their wallets, it puts up the price of things, it effectively acts as a tax, and that’s why we must bring it down,” he said.

Prime Minister Rishi Sunak and his wife Akshata Murty arriving in Manchester on the eve of the Conservative Party Conference, in Manchester, England, on Sept.30, 2023. (Stefan Rousseau/PA)

Speaking to a broadcaster during a visit to Burnley, he said it’s a “deeply Conservative approach,” adding “this is what Margaret Thatcher did, this is what Nigel Lawson did.”

“This is in the tradition of great Conservative governments, bringing inflation down, because that’s the bedrock on which you build a strong economy. And that is the best way to help people with the cost of living,” he said.

The Bank of England (BoE) is tasked with keeping inflation at around 2 percent. But the index has run away after the COVID-19 pandemic, peaking at 11.1 percent in October last year before gradually falling back to 6.3 percent in August.

While the pandemic and Russia’s invasion of Ukraine have triggered the surge in inflation, many economists have said the BoE’s massive expansion of the money supply was the root cause of the problem.

Tax Cuts Unlikely This Autumn

The chancellor told The Times of London on Saturday that he’s currently “not in a position to talk about tax cuts at all” as interest payments on government debt have increased by tens of billions of pounds a year.

Mr. Hunt said he plans to move the government to that position by boosting the productivity of both the public and private sectors with artificial intelligence and welfare reforms.

Asked what taxes he would cut, he didn’t seem to have a preference.

“All taxes are distortive,” Mr. Hunt told the newspaper.

“We worry about inheritance tax, because it’s a tax on aspiration and savings, and we also worry about income tax because it’s important to make work pay,” he said.

“Despite the challenges of the last 13 years,” he said, referring to successive Conservative governments in Downing Street, “one of our proudest achievements is that as of last month you can earn £1,000 a month without paying a penny of tax or national insurance.”

“We have dramatically reduced taxes on lower-paid people. I would like to reduce taxes on everyone,” he said.

On Friday, the Institute for Fiscal Studies said forecasts show 37 percent of the national income will go to paying taxes by the time of the next general election, the highest since records began in 1948.

It would be 4.2 percentage points higher than the tax burden during the last general election, meaning this Conservative-led Parliament will have seen the biggest increase than any other since the Second World War.

However, more Labour governments have increased the tax burden than Conservative governments did over time, the analysis shows.

Labour has promised this week that they will adopt a strict regime of “never spend[ing] what we cannot afford” if they win the next general election.

The UK’s public debt stood at £2.6 trillion by the end of August or around 98.8 percent of the UK’s annual GDP.