LONDON, July 31 (Reuters) – Rishi Sunak, trailing in the race to become Britain’s next prime minister, has pledged to cut the basic rate of income tax by 20 percent by to 2029 in a potentially quick roll of the dice. the former Minister of Finance.
Sunak, once seen as the front-runner to replace Boris Johnson as he helped guide the economy through the ravages of the COVID-19 pandemic, has battled rival Foreign Secretary Liz Truss, who ‘has promised to reduce immediate taxes.
Sunak said he remained focused on fighting inflation, but once that was achieved he would follow through with an already announced plan to take 1p off income tax in 2024 and then take another 3p off at the end of the next parliament , probably. towards 2029.
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Both promises would bring income tax from 20p to 16p.
Sunak said the plan would mark the biggest income tax cut since Margaret Thatcher.
“It’s a radical vision but it’s also realistic,” he said in a statement on Sunday afternoon, a day before Conservative Party members begin receiving their ballots to vote for the party’s new leader.
Sunak told BBC Radio on Monday that he would finance the tax cut by growing the economy and being disciplined with public spending.
The search for a new British prime minister began on July 7 when Johnson was forced to announce his resignation after months of scandal. Conservative lawmakers have narrowed a field of candidates down to Truss and Sunak, with party members announcing their decision on September 5.
With inflation rising to a 40-year high of 9.4% and growth stagnant, the economy dominated the early stages of the contest, with Sunak arguing that Truss’ plan to reverse a rise in social security contributions and canceling a planned corporate tax increase would stoke inflation. further away.
“I don’t think embarking on a series of excessive borrowing at a time when inflation and interest rates are already rising,” Sunak said.
Sunak said each penny cut in the income tax rate would cost around 6 billion pounds ($7.3 billion) a year, a figure he said would still allow the debt ratio to fall /UK GDP, if the economy grows according to officials. forecasts
Truss has argued that tax cuts are needed now to give the economy a boost. A recent YouGov poll showed Truss with a 24-point lead over Sunak among Conservative Party members.
($1 = 0.8220 pounds)
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Reporting by Kate Holton and Kylie MacLellan; Editing by Andrew Cawthorne
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