Government Promises Tax Cuts Once Inflation is Under Control, says UK Prime Minister Rishi Sunak
Britain’s Prime Minister, Rishi Sunak, has assured the public that tax cuts will be implemented once inflation is brought under control. Speaking at the Conservatives’ annual conference in Manchester, Sunak responded to mounting concerns from party members regarding rising tax levels in the wake of the COVID-19 pandemic.
“I know you want tax cuts. I want them too and we will deliver them. But the best tax cut we can give people right now is to halve inflation and ease the cost of living,” Sunak stated.
Throughout the year, Sunak and his finance minister, Jeremy Hunt, have consistently emphasized their priority of halving inflation. In October 2022, inflation reached an alarming 41-year high of 11.1%. The government believes that implementing tax cuts at this stage could potentially hinder the progress being made in managing inflation.
However, many party members are growing impatient for tax cuts, especially with a national election expected next year. Currently, the Conservatives are trailing behind the opposition Labour Party in opinion polls.
The Institute for Fiscal Studies, a non-partisan think tank, released a report on Friday suggesting that tax revenue is projected to represent 37% of the annual economic output during the time of the next election. This figure marks an increase from 33% during the previous election in December 2019. If realized, this would be the highest tax rate in Britain since at least the 1950s, although still lower than most similar European economies.
Jeremy Hunt, on Monday, announced plans to freeze the number of civil servants, which had risen during the pandemic. He ruled out near-term tax cuts in a newspaper interview published on Saturday.
As of August, inflation stood at 6.7%. The Bank of England forecasts a decrease to 4.9% in the final quarter of next year, with a target of 2% expected to be achieved in the second half of 2025.
Hunt is set to present updated economic forecasts and budget plans on November 22.
While the government reassures the public of their commitment to tax cuts, the priority of managing inflation remains paramount. As the country prepares for a potential national election, the issue of tax levels is likely to remain a key topic of debate. The public will eagerly await further updates on economic forecasts and budget plans in the coming weeks.