Rishi Sunak has suggested that tax cut giveaways before the election will be accomplished by making “difficult decisions to control welfare.” According to the prime minister, it is a priority to keep cutting people’s taxes, especially after introducing a 2p cut in national insurance. However, the only way to achieve that goal is by restraining the growth in the public sector and government spending. The possibility that the Conservative Party leader may reduce public spending to offer tax cuts ahead of a general election raises questions. Mr. Sunak also made it clear that if Labour comes into power, taxes are going up.
Labour leader Sir Keir Starmer previously pledged that taxes would not increase if he wins the election. Shadow chancellor Rachel Reeves assured that there would be no tax increases for working people under a Labour government if they came into power. The prime minister’s latest comments regarding tax cuts follow the implementation of a two percentage point cut in the main rate of national insurance.
Chancellor Jeremy Hunt believes that families with two earners are nearly £1,000 better off per year as a result of the pre-election cut. However, Labour criticized the move, arguing that the frozen tax thresholds would result in a de facto tax rise for millions. Rishi Sunak boasted that the autumn statement in November delivered “the biggest set of tax cuts in one event since the 1980s,” and expressed his commitment to continue cutting taxes responsibly by making difficult decisions on public spending and welfare.
The prime minister emphasized the need to control public spending and welfare while being disciplined with borrowing and debt. He declined to specify which taxation he would like to see reduced or abolished, but emphasized the importance of rewarding hard work in British society. The government faced pressure from Tory MPs after the autumn statement, with some calling for further income or inheritance tax cuts. Mr. Hunt also discussed the affordability of reducing taxes in 2024, expressing concerns over the pernicious nature of inheritance tax.
The decision to bring forward the national insurance reduction from April to January was seen as a signal that Mr. Sunak could call a spring election. A recent announcement that the Budget will be held on March 6 appeared to support this theory. However, Prime Minister Mr. Sunak stated that his “working assumption” is that he wouldn’t call an election until the second half of the year, ahead of the January 2025 deadline for the country to have its say.