Jeremy Hunt has reportedly told the Government it is “not likely to have as much room for tax cuts” as it did last year.
The Chancellor warned the Cabinet that opportunities to reduce the tax burden are now limited, in comments first reported by The Times.
Mr Hunt told colleagues: “We are not likely to have as much room for tax cuts as [we] had in the autumn.” Previously, he has publicly floated the idea of slashing tax rates ahead of the next General Election, if affordable to do so.
These comments come shortly after the International Monetary Fund (IMF) warned the UK Government against further tax cuts at it could jeopardise investment in the NHS and public services.
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The senior Conservative politician reportedly cited the “major structural weakness” in the UK economy and stated Germany, France and the US were more productive in comparison.
During his Autumn Statement last year, Jeremy Hunt announced National Insurance would be cut which will cost the Treasury around £9.76billion in the 2028 tax year, according to the Office for Budget Responsibility (OBR).
This tax cut came into effect on January 6 and will have been seen in pay slips this month with the main rate being cut from 12 to 10 per cent.
Both Mr Hunt and Prime Minister Rishi Sunak have pledged to lower taxes as the Conservative Party prepares to go to the polls in this year’s upcoming General Election.
At the World Economic Forum in Davos this month, the Chancellor shared his goal of the UK becoming a successful low-tax economy.
In response to the IMF’s assessment this week, Mr Hunt asserted that it was “too early to know whether further reductions in tax will be affordable in the Budget”.
The IMF downgraded the UK’s growth forecast for next year with growth expected to hit 0.6 per cent in 2024 and 1.6 per cent the next.
Calls to reduce the tax burden are popular among many Tory MPs as the political party is predicted to be decimated at the next election.
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Jeremy Hunt is watering down expectations of future tax cuts this year
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Speaking to LBC, Health Minister Dame Andrea Leadsom said: “I think there is no denying that tax cuts enable, facilitate economic growth.
“The ‘full expensing’ for businesses that the Chancellor introduced last year, the biggest ever tax cut, as I understand it, for businesses, will generate economic growth.
“I am a big fan of tax cuts but obviously I am not the Chancellor and cannot predict what steps he will be taking at the spring statement, which is quite soon now.
“But he will be looking to enable people to keep more of their hard-earned cash if he possibly can.”