Written by Kylie McLellan and Andy Bruce
LONDON (Reuters) – British Finance Minister Jeremy Hunt said on Sunday he would not make tax cuts that would boost inflation, days before announcing a major budget update that is widely expected to include cuts in some taxes.
Hunt is due to deliver an autumn statement on Wednesday that he hopes will revive the fortunes of Britain’s sluggish economy and the Conservatives in government before elections scheduled for next year, and the Sunday Times reported that he is considering cuts to income or social assistance. Security tax.
Johnson is under pressure from some conservative lawmakers who asked him to implement tax cuts, after they felt disturbed by the large lead of the opposition Labor Party in the opinion polls.
“We want to reduce the tax burden, but we will only do so in a responsible way,” Hunt told Sky News. “The one thing we won’t do is do some kind of tax cut that fuels inflation.”
Annual inflation fell to 4.6% in October from 6.7% the previous month, putting Prime Minister Rishi Sunak on track to fulfill his promise to halve it by 2023.
“I think the British economy has turned around this week,” Hunt said in a separate interview with Times Radio, adding that his priority was growth. “I will do everything I can think of to drive growth.”
Asked whether he would cut inheritance tax – a move the Sunday Times said could be delayed due to bad press – Hunt told Sky that “everything is on the table” ahead of his statement.
Limited options after spending big
Labor economics spokeswoman Rachel Reeves said cutting inheritance tax would be the wrong priority in the cost of living crisis.
“Cutting taxes on workers – if the government can explain where the money comes from – is something I would support,” Reeves told Sky News.
Hunt’s options are limited after heavy government spending amid the Covid-19 pandemic and high energy prices last year. Public debt is now approaching 100% of economic output, more than three times what it was twenty years ago.
However, official forecasts to be published on Wednesday are expected to show Hunt has more room to cut taxes before he runs into problems with fiscal rules than in the annual budget he published in March.
“If we want to become a dynamic, prosperous and vibrant economy, we need less tax pressure,” Hunt told Times Radio, adding that the only way to reduce personal taxes is to spend public money more efficiently.
“We want to show people that there is a path to lower taxes, but we also want to be honest with people, and this is not going to happen overnight.”
Although UK tax revenues are at their highest level since the 1940s, according to the Institute for Fiscal Studies, the country’s tax rate is lower than most other Western European countries. Data for 2021 from the Organization for Economic Co-operation and Development showed that the UK was the lowest among major European countries, much lower than 45% in France or 40% in Germany.
(Reporting by Kylie McLellan and Andy Bruce; Editing in Spanish by Ricardo Figueroa)
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