Conservative leadership hopeful Rishi Sunak has promised the biggest income tax cut in 30 years, slashing the basic rate from 20% to 16% if he becomes prime minister.
The former chancellor said the tax cut would amount to a 20% reduction and pledged to deliver the change by the end of the next parliament. Sunak said the plans are part of his “radical” tax vision, although the BBC noted the policy “builds on his previously announced 1p cut to income tax in April 2024”.
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His promise to take a further 3p off by the end of the next parliament means the overall tax cut, should he become prime minister, could be delivered “as late as December 2029”.
Sunak said that although his pledge on tax cuts was radical, it remained “realistic” in the current economic climate. “I will never get taxes down in a way that just puts inflation up,” he said as he unveiled his plans, promising to “always be honest about the challenges we face”.
Supporters of leadership rival Liz Truss accused Sunak of “flip flopping” on taxes and said she would “cut taxes in seven weeks, not seven years”. She has pledged to scrap April’s National Insurance rise, cancel a planned corporation tax rise and temporarily suspend green levies on energy bills.
What the papers said
The Guardian branded the announcement from Sunak a “last-gasp pitch” to Conservative members as the first ballots in the leadership race are set to drop today. His own supporting backbenchers have “privately voiced fears that he will not have time to regain public momentum” before members begin voting in the coming days, it added.
Although the leadership contest will officially run until September, “the majority of members are likely to cast their ballots in the coming days immediately after they are received”, said the paper.
The announcement is Sunak’s attempt to “shake off his image as the tax-hiking former chancellor” as he attempts to shore up votes for his “waning” campaign, said ITV. But “critics noted that the time frame for the tax reduction – with the deadline possibly as late as December 2029 – means it does not help families amid the current cost-of-living crisis”, the broadcaster added.
In promising to deliver “the biggest income tax cut since Margaret Thatcher’s government”, Sunak is “inviting direct comparisons between himself and his great hero” Nigel Lawson, who as chancellor under Thatcher slashed income tax rates, said Gordon Rayner in The Telegraph. But while there may be some “similarities between the two men” in their approach, Lawson “did not introduce the highest tax burden for 70 years, and he cut National Insurance rather than increasing it”.
Sunak’s supporters will hope his tax-cutting plans will be “a game-changing moment that finally closes the gap on the leadership race front-runner Liz Truss”, but they might also be entitled to ask: “If this was the plan all along, why did he wait until now to unveil it?” said Rayner.
He added that Sunak’s claim that his income tax cut would be the biggest in 30 years is “questionable”. “The fact that National Insurance has been increased by Mr Sunak by 1.25 percentage points means that a 4p cut would only be a 2.75p net reduction, even before the effect of ‘stealth’ taxes is taken into account,” he wrote.
What next?
Sunak’s campaign said the 1p cuts would be paid for by increased Treasury receipts via projected economic growth forecast by the Office for Budget Responsibility. But the UK is “still projected to experience the lowest growth in the G20 – apart from Russia – and have the worst growth in the G7 at around 0.5%,” said The Guardian.
While recent YouGov polling of Tory members put Truss more than 20 points ahead of Sunak, a new poll of Conservative councillors suggests that the leadership race could be much tighter than previously thought. Savanta ComRes polling revealed that 31% of councillors support Truss, while 29% are behind Sunak. Some 32% are still undecided.
