Tag: tax cut

Chancellor Jeremy Hunt aims to attract more investment to Britain during his Davos visit, emphasising the significance of lower taxes for economic growth…reports Asian Lite News

UK Chancellor Jeremy Hunt has hinted at an inclination to reduce taxes in the upcoming spring budget. Speaking to the BBC at the World Economic Forum in Davos, Switzerland, Hunt emphasised the positive correlation between lower taxes and dynamic, faster-growing economies. In the previous autumn statement, he had already reduced national insurance for workers by 2% and announced tax relief for businesses.

The chancellor expressed the possibility of further tax cuts if inflation decreases this year, coupled with lower interest rates, providing fiscal headroom. Hunt aims to attract more investment to Britain during his Davos visit, emphasising the significance of lower taxes for economic growth.

Observing the direction of economic growth in North America and Asia, Hunt believes that low-tax economies are more competitive and generate increased revenue for public services like the NHS. While not providing specific details on the scale of potential tax cuts, he awaits an assessment from the Office for Budget Responsibility (OBR).

The focus of the budget on March 6 is expected to be on income tax, as the overall tax burden is set to rise to its highest level in decades. Frozen tax thresholds since 2021, remaining unchanged until 2028, contribute to households being pushed into higher income tax brackets. Typically, tax thresholds rise with inflation, but the current freeze has sparked anticipation for adjustments in the upcoming budget.

Inflation Rose in December

The UK’s consumer price index (CPI) rose by 4 per cent in the 12 months to December 2023, up from 3.9 per cent in November, according to official data. This was the first inflation increase since February 2023, said the Office for National Statistics (ONS).

Meanwhile, Chancellor Hunt said he was “confident” that inflation will continue to fall and that prices were “heading in the right direction”. He told reporters on Thursday: “I think it’s coming down. I think it will continue to fall.”

The ONS said that CPI rose by 0.4 per cent monthly in December, reports Xinhua news agency. “The rate of inflation ticked up a little in December, with rises in tobacco prices due to recently introduced duty increases,” said Grant Fitzner, chief economist of the ONS. Prices in the alcohol and tobacco division rose by 12.8 pe cent in the year to December.

As announced in Autumn Statement 2023 in November, duty rates on tobacco products increased by retail price index (RPI) inflation plus 2 per cent, with duties on hand-rolling tobacco products increasing by RPI inflation plus 12 per cent.

The tobacco price rises “were offset partially by falling food inflation, where prices still rose but at a much lower rate than this time last year”, said Fitzner. “Meanwhile, the prices of goods leaving factories are little changed over the last few months, while the costs of raw materials remain lower than a year ago,” he added.

According to the ONS, food and non-alcoholic beverage prices rose by 8 per cent in December year-on-year, the lowest growth rate since April 2022. The latest data, significantly down from a peak of 11.1 per cent in October 2022, is still double the central bank’s 2 per cent target.

Economists are expecting the Bank of England to cut interest rate, which currently stands at a 15-year high of 5.25 per cent, at around the middle of this year.

However, the UK teeters on the edge of recession, evident in recent official growth figures revealing a contraction in the economy from July to September. A recession, commonly defined by two consecutive quarters of declining GDP, looms on the horizon.

Despite the economic challenges, Chancellor Hunt remains cautiously optimistic. While asserting that it’s premature to determine the scope of potential tax cuts, he pointed to the swift decline in inflation as a positive indicator for Britain’s improving economic outlook.

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Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election…reports Asian Lite News

Jeremy Hunt has said he must “double down” on high prices after admitting a package of pre-election tax cuts this autumn was looking unlikely.

The government would not make moves to “pump billions of additional demand” into the economy, the chancellor added.

The prime minister had previously pledged to halve inflation to about 5% by the end of the year but it has remained at 8.7%.

In an interview with the Financial Times, Hunt said achieving Rishi Sunak’s promise was “going to be more challenging than we thought”.

“We will not countenance tax cuts if they make the battle against inflation harder,” he said. “If we were to pump billions of pounds of additional demand into the economy when inflation is already too high, that would mean fiscal policy working against monetary policy.”

Hunt’s comments will concern Tory MPs, who have been pushing for tax cuts in the autumn statement in the run-up to next year’s general election.

The chancellor was speaking before his annual speech to the City of London on Monday, during which he will announce measures he hopes will grow the economy by making UK stock markets more appealing to firms seeking to float their businesses.

During the speech, he will also set out proposals to simplify rules for buying and selling shares and deliver higher returns for investors, as well as announcing a vision for a new kind of stock exchange allowing private companies to access markets without floating.

Hunt said: “These commonsense changes are grasping our newfound Brexit freedoms to simplify the rulebook – making it easier than ever for firms to research, raise funds, and float their business.”

The chancellor also said the government could resist “inflationary” public sector pay demands, while applying new pressure to companies, saying they ought to hold down prices and had “moral responsibilities to their own customers in a cost of living crisis”.

He said: “There are times when margin rebuild is legitimate and there are times when you need to think about the impact on your own customers.”

Cabinet ministers have been pushing Sunak to accept a 6% public sector pay rise recommended by the independent pay review bodies, the Times reported.

It is understood that the education secretary, Gillian Keegan, health secretary, Steve Barclay, defence secretary, Ben Wallace, justice secretary, Alex Chalk, and home secretary, Suella Braverman, are among the high-profile ministers lobbying Sunak.

Earlier this year the chancellor came under pressure from Conservative backbench MPs to unveil a raft of tax-cutting measures.

“We can’t wait until the next general election, people are depressed, we’ve got to give them hope,” said the backbencher Edward Leigh. “Corporation, personal, fuel tax – you’ve got to give them something.”

Another MP was reported to have told Hunt the Conservative party would face a “fin de siècle” – the end of an era – in government if people did not feel they had more disposable income.

The Tories continue to trail Labour in the polls, with recent modelling based on a mega-poll of new constituency boundaries suggesting Keir Starmer’s party are on course to secure a 140-seat majority in the next election.

With the Conservatives still suffering from a large polling deficit, Labour’s support was found to be at about 35% – 12% ahead of Sunak’s party.

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