Rishi Sunak: VAT cut would 'disproportionately benefit wealthy'
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However, Chancellor Rishi Sunak is reportedly standing in the way. One of Johnson’s aides said: “The Treasury isn’t keen and I don’t understand why, because it immediately cuts inflation, which is useful if you did it on energy and food.” Mr Johnson believes that a VAT cut would be more effective and equitable than other ideas currently being floated by the Treasury.
However, the Chancellor is apparently leaning towards an income tax cut.
Downing Street reportedly views this as being “more symbolic than genuinely helpful to those who need it most”, the aide told the Times.
This comes as the country battles a mounting cost of living crisis, with the Bank of England forecasting that the UK will see double-digit inflation and a 1 percent contraction in the size of the economy later this year.
Earlier this week, inflation surged to 9 per cent – its highest level in 40 years.
Rising prices have been caused by a variety of factors, such as the war in Ukraine and the Covid-19 pandemic.
Boris Johnson has been under increasing pressure to introduce tax cuts to tackle the issue but did not include any tangible plans to do so in the Queen’s Speech earlier this month.
The speech included no pledge to cut VAT, nor did Mr Johnson’s agenda include plans to scrap the National Insurance increase.
Speaking to Express.co.uk after the speech was delivered, veteran Conservative backbencher Peter Bone called on Mr Johnson to “reverse” the hated tax rise and slash VAT on energy.
He told Express.co.uk: “I think the Chancellor should be looking at all sorts of ways to get the economy to grow and that’s the key.
“Because we need to have the economy growing and more people in work.
“Because if you have more people in work, even if tax rates are lower, you finish up with more tax taken.”
He added: “We’ve seen the Queen’s speech today and there’s a lot of talk about legislative bills, but the truth of the matter is that many of these are in the hands of the Chancellor by cutting taxation rates.
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“By a whole raft of measures we can get the economy to grow.
“I’m worried that there’s too much concentration on ‘if we stick taxes up we’ll get more money in’.
“Well, the rate of tax is only one element – it’s the size of the economy that dictates how much tax comes in.
“We should be doing what we can to get the economy to grow.”
Former Brexit minister and leading COVID rebel Steve Baker agreed, telling Express.co.uk that the UK “desperately needs growth”.
He said: “From where we are today, tax cuts will always be welcome. But can the Chancellor balance the books?
“We desperately need growth. And of course that means lower taxes.”
Meanwhile, the Taxpayers Alliance has called on the Prime Minister to implement the planned income tax cut – set to come into force from 2024 – immediately.
It warned the Government that a pledge to “reform taxes tomorrow won’t help Brits struggling today.”
The Adam Smith Institute accused Mr Johnson of failing to deliver “immediate solutions to the cost of living crisis”.
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