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‘Tax may go up if insurance scrapped’

Some Tory MPs now believe the Conservative party is planning to make scrapping NI an election manifesto commitment…reports Asian Lite News

Income tax may eventually have to be raised to pay for abolishing national insurance, Jeremy Hunt has suggested the day after delivering the government’s spring budget.

The chancellor spent about £10bn to cut NI by 2p in the budget, and has indicated that the government’s eventual ambition is to scrap the tax entirely.

Asked how he would pay for this, Hunt told Sky News: “We’re not saying that this is going to happen anytime soon, and indeed that’s not the only way that you can end that unfairness of taxing work: you can merge income tax and national insurance.”

It suggests that the government is looking at raising income tax as one way of paying for abolishing NI, whose existence Hunt said was “unfair” as it amounted to a “double tax on work”.

Some Tory MPs now believe the Conservative party is planning to make scrapping NI an election manifesto commitment. Labour said the move would cost £46bn a year, equivalent to £230bn over the course of a five-year parliament, and questioned how the Tories would pay for it.

Rachel Reeves, the shadow chancellor, told ITV’s Good Morning Britain: “At the end of the budget statement after an hour and 10 minutes, the chancellor started floating this idea of getting rid of national insurance altogether.

“I think it is really irresponsible to start making promises without having the faintest idea of where the money is going to come from. The last time ministers attempted this it was Liz Truss and Kwasi Kwarteng. They made £45bn of uncosted and unfunded tax cuts. The chancellor yesterday suggested £46bn of unfunded tax cuts.”

In broadcast interviews on Wednesday and Thursday, the chancellor stressed he wanted to “end the unfairness” of the system but that eliminating NI contributions altogether would be a “huge thing to do”. He admitted that the tax would not be scrapped “any time soon”.

Any rise in income tax would affect pensioners, who do not pay national insurance. Some Tories criticised the decision to cut NI rather than income tax in the budget on Wednesday because of this.

Hunt insisted to Sky that the government had done an “enormous amount for pensioners” and that ultimately growing the economy would help to increase the state pension. “This government introduced the triple lock … we have really prioritised pensioners,” he said.

Experts from the Institute for Fiscal Studies and the Resolution Foundation, two influential economics thinktanks, said the budget left the “big picture” largely unchanged because overall taxation was still rising as a result of fiscal drag.

In analysis published overnight, the Resolution Foundation said the budget showed real household disposable income was set to fall by 0.9%, making this parliament – between 2019 and 2025 – the first in modern history in which living standards have dropped.

The IFS director, Paul Johnson, said the chancellor had used “smoke and mirrors”, while Torsten Bell of the Resolution Foundation said Wednesday’s tax cuts relied on the prospect of £19bn of post-election tax rises and “the fiscal fiction that another £19bn of cuts to public services can be delivered”.

Hunt also warned he ‘can’t afford’ to go further on taxes yet amid warnings the Budget package was ‘not enough’ to turn the tide at an election.

He also delivered a strong hint that the Conservative manifesto could include an ambition of scrapping the levy altogether, condemning it as ‘complex’ and unfair.

However, the overall burden is still rising and many Tories had been pushing for him to target income tax, sparking complaints there was nothing ‘vivid’ to win back voters in the package.

Concerns have been fuelled further by analysis from the Resolution Foundation pointing out that pensioners – regarded as key Tory supporters – have ended up the losers.

That is despite the fact that those who draw income from their private and workplace pensions are paying more tax as a result of stealth taxes – to the tune of £960 a year on average.

In a round of interviews from Liverpool this morning, Hunt acknowledged that taxes had gone up to cope with the impact of Covid. ‘I’m not pretending that I brought all those taxes down in one go. We can’t afford to do that,’ he told Times Radio.

‘It wouldn’t be responsible to do that. But do I want to carry on bringing them down, as I did yesterday, as I did in the autumn statement? Yes, I do.’ 

ALSO READ-Hunt seeks to win over voters with £900 tax cut

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Hunt seeks to win over voters with £900 tax cut

Chancellor of the Exchequer also announced another 2 percentage-point cut to the national insurance payroll tax, following a similar move in Nov…reports Asian Lite News

Jeremy Hunt cut personal taxes as the Conservative Party tries to win back voters ahead of a nationwide election expected later this year.

Delivering his budget, the Chancellor of the Exchequer announced another 2 percentage-point cut to the national insurance payroll tax, following a similar move in November. Taken together, he said, 27 million employees will get an average tax cut of £900 (€1,052) a year. He also said the UK’s budget watchdog had upgraded the country’s growth prospects for this year and next.

“We know that lower-taxed economies have more energy, more dynamism, and more innovation,” Hunt said in the House of Commons on Wednesday. “We have today put this country back on the path to lower taxes.”

The tax cut is a central part of the Tories’ strategy to close a 20-point gap to the opposition Labour Party in national polls, prior to an election that Prime Minister Rishi Sunak must call by January 25 at the latest. But Hunt was constrained by fragile public finances with the UK entering a recession last year, and the chancellor went into his budget with just £12.2bn (€14.26bn) of breathing space against his key fiscal rule, a margin near historic lows.

Hunt barely kept his budget within the self-imposed rule to have the ratio of borrowing to GDP falling in the final year of his five-year forecast period. He did so by raising taxes by extending a windfall tax on the profits of oil and gas companies and overhauling a tax break for foreigners moving to the UK.

After the change, foreigners arriving in the UK will have a four-year hiatus on tax on their overseas assets, before paying the same rate as Britons. The current non-dom regime lasts for 15 years but with an annual fee.

In a move that appeared designed to get more houses onto the market, Hunt announced a reduction in property capital gains tax and the end of a tax break for people renting out second homes as short-term lets for tourists. Hunt also said the threshold at which families start to lose child benefits will rise by £10,000 in April.

Other budget measures included a freeze on fuel and alcohol duty, a new tax on vaping, and a hike in air passenger duty on business travel.

The Conservatives were given a boost by the rosier growth forecasts from the OBR: Hunt said growth is now due to be 0.8% in 2024, up from the previous estimate of 0.7%. The watchdog is now predicting 1.9% growth for 2025, compared to a previous reading of 1.4%, Hunt said.

Hunt also said he wouldn’t be reducing future public spending plans, an option he’d been considering to help finance his tax cuts. Still, critics have said the 1% increase in spending Hunt is baking in — which involves real terms cuts for unprotected departments — would be politically unsustainable. Hunt didn’t detail his plans, but said boosting public sector productivity would be a key priority.

The budget measures will increase the UK tax burden by 1.1 percentage points, the OBR said.

“The hidden sting in the tail is the continued frozen tax thresholds which will eat into any savings” from the national insurance cut, Christine Cairns, tax partner at PwC, said in an emailed statement.

The chancellor is navigating the constraints of fragile public finances and a stagnant economy that entered a shallow technical recession at the end of 2023.

Inflation has fallen faster than anticipated and market expectations for interest rates are well below where they were prior to Hunt’s Autumn Statement in November, but many British households are still feeling the cost of living squeeze, while public services remain extremely stretched.

Former British finance minister Philip Hammond said it would be a mistake not to have a system in place that encourages so-called “non-doms” to reside in the U.K.

Non-domiciled tax status allows people who are based, but not settled, in the country to only pay U.K. tax on money made in the country. As part of the Spring Budget statement, U.K. Finance Minister Jeremy Hunt said on Wednesday that this would be scrapped and replaced with a new system.

“It would be a massive own goal to remove non-dom taxation and then see a big outflow of investment from the U.K.,” Hammond told CNBC’s Silvia Amaro on Wednesday.

“It would be a mistake to have no regime in place that encouraged people in those circumstances to base themselves in the U.K.,” he said. “If we said for example to people that they have to pay tax on their worldwide assets if they come and spend time in the U.K. I think that would probably be detrimental to the U.K. economy in the long term.”

Hammond said the integrity of the policy would now depend on the details of Hunt’s new plan.

Hammond was broadly positive about the statement, saying it was “a careful and thoughtful budget from a careful and thoughtful Chancellor.”

He also said that he would like to see lower taxes eventually, but that public services needed to be taken into account. “In the future we need higher productivity, higher economic growth, so we can reconcile this tension between the desire for good public services and the desire to keep taxes at a bearable level.”

ALSO READ-Will Hunt Spring A Surprise?

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Will Hunt Spring A Surprise?

Jeremy Hunt will use his final budget before the election to promise voters lower tax and higher growth, with the chancellor set to announce a 2p cut to national insurance…reports Asian Lite News

Jeremy Hunt will use his final budget before the election to promise voters lower tax and higher growth, with the chancellor set to announce a 2p cut to national insurance, even at the expense of public services.

Sources said Hunt had decided to reduce national insurance for the second time in less than six months, having defied calls from some in Downing Street and across the party for a more expensive pre-election income tax cut.

The chancellor will frame the move as a push for growth, opportunity and prosperity, having brushed off concerns among many Tories that cutting national insurance would not be enough to overturn the party’s 20-point deficit to Labour in the polls.

But he is likely to impose strict spending limits to come in after the election to help pay for the tax cuts, causing some in his party to worry that voters will punish them for cutting services rather than rewarding them for lowering taxes.

Hunt will say: “Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity. But if we want that growth to lead to higher wages and higher living standards for every family in every corner of the country, it cannot come from unlimited migration. It can only come by building a high-wage, high-skill economy. Not just higher GDP, but higher GDP per head.”

In a message designed to bolster the pre-election message that a Labour government would take the country backwards, Hunt will add: “Instead of going back to square one, our plans mean more investment, more jobs, more productive public services and lower taxes.”

However, Labour will attempt to focus the debate on declining living standards. Rachel Reeves, the shadow chancellor, said: “The Conservatives promised to fix the nation’s roof, but instead they have smashed the windows, kicked the door in and are now burning the house down.”

In his post-budget response, the Labour leader, Keir Starmer, will say taxes will rise for most families even after the budget, given that thresholds for national insurance and income tax continue to be frozen in cash terms.

An analysis by the Resolution Foundation thinktank on Tuesday showed that only those paid between £27,000 and £59,000 a year would be better off as a result of both the autumn statement and Wednesday’s budget. Those paid £16,000 would lose almost £500 a year, as would those receiving more than £60,000.

Hunt and Rishi Sunak have spent the last few weeks trying to find enough money for a tax cut on the scale of last November’s autumn statement, when the chancellor reduced national insurance from 12% to 10%.

The chancellor has been hampered by forecasts from the Office for Budget Responsibility that showed he had less money than he had hoped to be able to spend without breaking his promise to have debt beginning to fall in five years’ time.

Hunt is preparing however to announce a series of targeted tax rises to help pay for the national insurance cut. They include limiting tax breaks to non-doms, introducing a levy on vaping products, increasing taxes on short-term holiday lets, extending the energy windfall tax and increasing taxes on business-class flights. Together these measures are expected to raise about £5bn a year.

More controversially, Hunt is preparing to defy economists’ warnings of an impending public services crunch and reduce his forecasts for departmental spending after the election.

The plans he set out in November assumed departmental budgets would rise 1% above inflation each year after the election, all of which would be soaked up by protected departments such as health and defence. However, the chancellor is set to reduce that figure to just 0.75%, meaning unprotected areas such as justice and local government would face cuts of up to 20% over the course of the parliament.

The plans have sparked concern among some in the Tory party, who point to a series of polls showing that voters would prefer higher public spending and higher taxes than the promise of immediate tax cuts.

“The tax cuts are going to require even more unrealistic public service cuts post-election,” said one Tory insider. “There is already a big argument about whether the public will react more badly to that than they do positively to the tax cuts themselves.”

Hunt decided to reduce national insurance despite some in No 10 pushing for a cut to income tax instead, which they argued would be more easily understood by voters. Since announcing November’s national insurance move, the Conservatives have fallen one point further behind Labour in the polls.

One Tory MP said: “It didn’t work last time round, what makes them think it will be any different this time?”

But the chancellor argued that focusing on national insurance would be less inflationary, and unlike income tax would apply to the whole of the UK.

Many Tory MPs also expect the prime minister to promise further tax cuts in the election manifesto, including as large as 4p from income tax.

“It would create a clear dividing line with Labour,” said one. “There’s no way that they could match that.”

Hunt is also preparing to make other tax cuts on Wednesday, including another freeze in fuel duty.

Sources have said he is also likely to continue the freeze in alcohol duty that he announced last year but is set to run out this August.

Sunak will visit two pubs in different parts of the country this week, sparking speculation among industry sources that the chancellor could go even further and announce a temporary cut in VAT and business rates for the hospitality industry. Pubs, restaurants and hotels have been campaigning heavily for such a move given that so many hospitality businesses have closed in recent years as a result of spiralling costs.

ALSO READ-Labour seeks deeper UK-India cooperation  

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Hunt may extend energy windfall tax by a year

Hunt raised the tax in November 2022 from its initial 25% rate to 35%, bringing the overall tax burden on North Sea oil and gas producers to 75%, among the highest in the world…reports Asian Lite News

Finance minister Jeremy Hunt is expected to announce a one-year extension of a windfall levy on energy firms’ profits in this week’s budget, industry sources briefed on the move said.

The energy profit levy (EPL) was introduced in May 2022 after a jump in energy prices resulting from Russia’s invasion of Ukraine.

Hunt raised the tax in November 2022 from its initial 25% rate to 35%, bringing the overall tax burden on North Sea oil and gas producers to 75%, among the highest in the world.

The British chancellor also extended the tax to 2028 from 2025 and expanded it to electricity generators with a levy of 45% in an effort to raise tens of billions of pounds to plug a major hole in public finances.

In his annual tax-and-spend speech on Wednesday, Hunt is expected to extend the levy by one more year to 2029. The tax rate, as well as a 29% investment allowance in the windfall tax that allows companies to offset spending, would remain unchanged, the sources said.

Britain’s finance ministry did not immediately respond to a request for comment. North Sea producers have warned in the past that the higher levy would lead to lower investment in the country’s oil and gas output.

Over the weekend, Hunt sought to dampen speculation about big pre-election tax cuts in this week’s budget, saying there had been a worsening in the economic outlook, but he hinted at some help for voters.

Meanwhile, industry leaders have hit out at reported plans from Chancellor Jeremy Hunt to extend the life of the windfall tax during next week’s Spring Budget.

According to a report from Bloomberg, the Chancellor is considering extending the levy, due to expire in March 2028.

The same report said the move is “low down the list of potential measures under consideration” – so it may not happen – and the Treasury didn’t respond to a request for comment.

Maintaining the energy levy for an extra year would increase the tax take in 2028-2029, the crucial fifth year of the OBR’s forecast horizon during which Hunt’s own fiscal rules state that the national debt must be falling. That would give him a bit of extra breathing space to ease other taxes.

ALSO READ-Economy is on the right track, claims Sunak

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Hunt dampens hopes of tax cuts  

The Chancellor of the Exchequer had been widely expected to cut taxes in Wednesday’s budget, in a move seen as a way of closing the gap on the main Opposition Labour Party ahead of elections…reports Asian Lite News

Finance Minister Jeremy Hunt talked down the likelihood of tax cuts in this week’s budget, pledging “prudent and responsible” measures “for long term growth”.

The Chancellor of the Exchequer had been widely expected to cut taxes in Wednesday’s budget, in a move seen as a way of closing the gap on the main Opposition Labour Party ahead of elections.

Rishi Sunak’s Conservative Party is trailing in the polls with pollsters predicting that Labour leader Keir Starmer in on track to win the keys to number 10 Downing Street at a general election later this year.

Voters, hit by a cost of living crisis, have repeatedly punished the Conservatives in a string of recent by-elections.

With the Bank of England’s main interest rate sitting at a 16-year high of 5.25%, millions of voters are also suffering from soaring mortgage repayments.

“It’s going to be a prudent and responsible budget for long term growth,” Hunt told Sky News television channel. Official data last month showed Britain had sunk into recession after the economy shrank in the final two quarters of 2023.

While economists predicted that the recession could be short-lived, the data has been a big setback for Sunak, who has placed economic growth as a key priority.

But Hunt said he would not cut taxes at the expense of future generations. “I think the most unconservative thing I could do would be to cut taxes by increasing borrowing,” he told the BBC.

“Because that’s just cutting taxes and saying that future generations have to pick the tax up,” he added.

Although he would not be drawn on tax measures expected in the budget, Hunt did announce an £800 million ($1.01 billion) package of technology reforms designed to make public services more efficient and reduce paperwork.

As part of the package, police will use drones to assess incidents such as traffic collisions and artificial intelligence (AI) will be deployed to speed up the results of cancer scans in the state-run National Health Service.

“There is too much waste in the system and we want public servants to get back to doing what matters most: teaching our children, keeping us safe and treating us when we’re sick,” Mr. Hunt said in a statement.

According to The Sunday Times, the Office for Budget Responsibility told Hunt on Wednesday that he has £12.8 billion of headroom to play with — more than £2 billion less than the figure the Treasury is said to have previously been basing its calculations on.

After a shallow recession in 2023, the economy looks set to grow only slowly in 2024 while demands are mounting for spending on stretched public services and investment. Debt has soared to almost 100% of economic output after the COVID pandemic and the surge in energy prices hammered the public finances. 

Nonetheless, Hunt and Prime Minister Rishi Sunak are under pressure to cut taxes to help the party’s flagging fortunes before a national election expected later this year. 

Many Conservative lawmakers say the budget represents the last chance of turning around the centre-left opposition Labour Party’s 20-point lead in opinion polls. 

Speaking to Sky News on Sunday, Hunt said he would like to cut taxes further possibly as soon as Wednesday. 

“What you saw in the Autumn Statement was a turning point, when we cut two pence off the National Insurance rate. We will hope to make some progress on that journey, but we’re going to do so in a responsible way,” Hunt told the broadcaster.

British bond markets went into a slump 18 months ago when former Prime Minister Liz Truss and finance minister Kwasi Kwarteng promised sweeping and unfunded tax cut plans which had to be quickly reversed by Hunt. 

In November, he announced some cuts to business and payroll taxes but the overall tax burden is still rising, largely because thresholds for paying many taxes have not risen in line with inflation. 

Media reports have speculated about possible cuts to income tax rates, another social security cut or the relaxation of the threshold freezes. 

Budget experts have said Hunt might again claim that he can afford to cut taxes now by making unrealistic promises of a squeeze on public services that are already under huge strain. 

Reports have also cited a possible tightening of tax rules for so-called “non-dom” residents on their overseas earnings. 

Hunt focused on another way that he could carve out a bit more fiscal wiggle room, telling BBC television on Sunday he would “rethink our whole approach to public spending.” The finance ministry said on Saturday it planned to improve public sector productivity which would deliver up to 1.8 billion pounds ($2.3 billion) of worth of benefits annually by 2029. 

ALSO READ-Hunt to allow private firms to trade shares on exchanges

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Hunter Biden Indicted for Tax Evasion in California

Hunter Biden

In September, Hunter Biden was indicted on separate gun-related charges…reports Asian Lite News

US President Joe Biden’s son Hunter Biden was indicted in California on nine counts related to a Justice Department investigation into his taxes, the media reported.

According to the indictment, filed in the US District Court for the Central District of California, the charges include failure to file and pay taxes, evading a tax assessment, and filing a false or fraudulent tax return, Xinhua news agency reported.

The indictment, the second criminal case that Special Counsel David Weiss has brought against the president’s son, showed that Hunter Biden engaged in a four-year scheme to not pay at least 1.4 million US dollars in federal taxes between 2016 and 2019.

Weiss first began investigating the president’s son five years ago as the US attorney for Delaware, appointed by former US President Donald Trump.

In September, Hunter Biden was indicted on separate gun-related charges.

Less than a year ahead of the 2024 presidential election, the US president will be fighting a Republican impeachment bid while his son, the first child of a sitting president to be criminally indicted, struggles to avoid prison in two criminal cases.

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Hunt cuts National Insurance as tax burden rises

Hunt said he would cut the main rate of national insurance by 2 percentage points to 10% from Jan 6 at a cost of about £9bn…reports Asian Lite News

Chancellor Jeremy Hunt has cut business and personal taxes by £20bn in an Autumn Statement aimed at boosting growth, but the UK’s budget watchdog warned that overall taxes are still rising to a postwar high.

The independent Office for Budget Responsibility shed a harsh light on Hunt’s fiscal plan, saying it would provide only “a modest” boost to growth and would see the tax burden rise for each of the next five years.

In a highly political statement on Wednesday, Hunt said he would cut the main rate of national insurance by 2 percentage points to 10 per cent from January 6 — the start of what is expected to be an election year — at a cost of about £9bn.

The other big measure saw the chancellor make permanent the “full expensing” capital allowance regime, at a cost rising to £11bn, which he described as “the largest business tax cut in modern British history”.

The timing of the national insurance cuts — benefiting 27mn working people — prompted speculation the government wants to leave open the option of a spring general election if its dire opinion poll ratings improve.

But the OBR said the tax cuts were dwarfed by the impact of the government’s freeze on tax thresholds between 2022-23 and 2028-29; it said nearly 4mn more people would end up paying income tax for the first time and 3mn more would move to the higher rate.

“While personal and business tax cuts reduce the tax burden by half a percentage point, it still rises in each of the next five years to a postwar high of 38 per cent of GDP,” the fiscal watchdog said.

Rachel Reeves, shadow chancellor, accused the government of presiding over record tax rises because of such “fiscal drag”, but did not commit Labour to opposing any of Hunt’s policy measures. Sir Ed Davey, Liberal Democrat leader, called the Autumn Statement “a hoax”.

The OBR also cut its forecast for economic growth and warned that the Autumn Statement’s measures to kick-start the economy would provide only “a modest boost to output of 0.3 per cent in five years”.

The chancellor had opted to leave government departmental spending “broadly unchanged”, the OBR said, reducing borrowing by £27bn compared with prior forecasts but leaving budgets squeezed.

Hunt said he would set a new target to keep public spending growth below overall economic growth “while always protecting services”.

Hunt claimed that, with inflation falling to 4.6 per cent and the OBR showing that debt was on a sustainable path, it was time to take the foot off the fiscal brake.

“Our plan for the British economy is working but the work is not done,” the chancellor said, as he set out 110 supply-side measures, intended to boost business, bring the sick back to work and get more capital flowing into the economy.

The full expensing of capital investment, which was due to expire in 2026, allows a company to immediately deduct all of its spending on IT equipment, plant or machinery from taxable profits. Extending it was a priority for business groups.

The chancellor said the measures would increase business investment in the economy by about £20bn a year within a decade and were “a decisive step towards closing the productivity gap with other major economies”.

The OBR said it expected the economy to grow 0.6 per cent this year and 0.7 per cent next year. This compares with the watchdog’s previous forecasts of a 0.2 per cent contraction this year and 1.8 per cent growth in 2024. The Bank of England expects growth to remain flat next year.

The chancellor confirmed that the state pension would rise by 8.5 per cent in April and that universal credit and other benefits would increase by 6.7 per cent, in line with September inflation, rather than the lower October level.

The OBR forecast that living standards, as measured by real household disposable income per person, would be 3.5 per cent lower in 2024-25 than their pre-pandemic level.

“While this is half the peak-to-trough fall we expected in March, it still represents the largest reduction in real living standards since Office for National Statistics records began in the 1950s,” it said.

Hunt also promised measures “to unlock the building of more homes” in the UK, which has consistently fallen short on government housebuilding targets.

These include a plan to refund planning fees if local authorities take too long to handle applications and £32mn to “bust the planning backlog”. Hunt also said he would freeze duty on alcohol, a move applauded by the industry.

ALSO READ-Hunt to claim economy is ‘back on track’

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Hunt hints at inheritance tax cut

The chancellor had been expected to hold off from cutting taxes until next year as he and Rishi Sunak continue to focus on reducing inflation..reports Asian Lite News

Jeremy Hunt is considering slashing the UK inheritance tax rate in next week’s autumn statement after economic forecasters told the chancellor he would have more money to spend thanks to rising tax revenues and falling borrowing costs.

Hunt is weighing up big cuts to the tax people pay after inheriting wealth, paid for in part by better than expected government spending forecasts and by raising benefits by less than expected.

The chancellor had been expected to hold off from cutting taxes until next year as he and Rishi Sunak continue to focus on reducing inflation.

But after UK inflation fell further than expected last month and with Tory MPs clamouring for a pre-election giveaway, sources say the chancellor is open to the idea of doing it sooner.

“Cutting inheritance tax is an option being considered, but it all depends on affordability,” said one person who has been briefed on the options under consideration.

Officials at the Office for Budget Responsibility (OBR) will present their forecasts to the chancellor on Friday for how much “headroom” he has to spend on giveaways without breaking his own fiscal rules.

In the spring the OBR said he could spend an extra £6.5bn and still have debt falling as a proportion of gross domestic product in five years’ time. The Resolution Foundation thinktank has predicted that could now be £13bn, although reports suggest it could be even higher.

Hunt is also considering raising extra revenue by putting benefits up by 4.6% to keep up with October’s inflation figures, rather than 6.7%, which would be in line with September’s figures. This change could save ministers £2bn but would hit an estimated 9m households and cost single mothers an estimated £218 a year.

Hunt and the prime minister have been under pressure for months to use the autumn statement to cut taxes, a move many Tory backbenchers believe will help the party erode some of Labour’s 20-point lead in opinion polls. This week the Conservatives fell to just above 20% in the polls, a level not seen since the aftermath of Liz Truss’s disastrous “mini-budget”.

Nadhim Zahawi, a multimillionaire former Conservative chancellor, has led a campaign to abolish the tax, calling it “the other spectre that haunts us alongside death”.

Hunt is open to the idea of a cut partly because inheritance tax is highly unpopular with Conservative voters and partly because it would cost less than cutting income tax. The Times reported on Friday he was considering reducing the rate from 40% to either 30% or 20%, with a promise to abolish it altogether in the next Tory manifesto.

The Institute for Fiscal Studies has said abolishing inheritance tax would cost an estimated £7bn a year, half of the benefit of which would be enjoyed by people inheriting estates worth £2.1m or more. The potential loss to the Treasury rises to almost £15bn a year by 2032.

The chancellor is also reported to be considering extending tax cuts for businesses that allow them to claim back what they spend on new machinery and office equipment in tax allowances. Hunt said in the spring that he would allow “full expensing” for a trial period of three years, but is now said to be prepared to make the scheme permanent.

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Inflation slows to 4.6%

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Meanwhile, inflation fell sharply in October to its lowest rate in two years, largely due to lower energy prices. Inflation, which measures the rate at which consumer prices rise, dropped to 4.6% in the year to October, down from 6.7% the month before.

The government says its pledge to halve inflation by end of the year has been met early. But there is a limit to how much credit ministers can take for the fall as energy prices settle.

Economists have said the main reason inflation has fallen from its peak of 11.1% in October 2022 is due to a fall this month in the energy price cap, which limits what suppliers can charge consumers per unit of energy. They also note the Bank of England’s decision to raise interest rates, in a bid to cool demand in the UK economy and slow price rises.

Rates are currently at 5.25%, a 15-year high, which has pushed up mortgage costs but also led to higher savings rates.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), an influential economics think tank, said that ministers did not “have a lot of control” over cutting inflation.

Grant Fitzner, chief economist at the Office for National Statistics (ONS), said price rises slowed in October as “last year’s steep rise in energy costs has been followed by a small reduction in the energy price cap this year”.

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India Mulls Domestic Tax to Counter EU Carbon Tax

The revenue collected from this tax could then be utilized for India’s green energy initiatives, benefitting companies transitioning towards cleaner energy and subsequently reducing their carbon footprint…reports Asian Lite News

Commerce and Industry Minister Piyush Goyal hinted at India’s contemplation of a domestic tax on specific sectors. The purpose is to aid the nation’s shift toward green energy and address the European Union’s carbon tax. Goyal criticised the EU’s decision, labelling it as “ill-conceived” and potentially detrimental to the EU’s manufacturing sector. He expressed hope that the EU would recognize the flaws in their Carbon Border Adjustment Mechanism (CBAM) and reconsider its implementation.

The EU’s plan to enforce a carbon tax by 2026 has already necessitated data sharing on carbon emissions from several carbon-intensive sectors. India vehemently opposes this move and is actively engaged in dialogues with the EU to resolve the issue. Goyal outlined India’s potential strategy: implementing a domestic tax aligned with European carbon tax rates. The revenue collected from this tax could then be utilized for India’s green energy initiatives, benefitting companies transitioning towards cleaner energy and subsequently reducing their carbon footprint.

Acknowledging the uncertainties surrounding these tax implementations, Goyal assured ongoing discussions with the EU to gain clarity. He emphasized the need for a fair approach that considers different values for carbon pricing, particularly in less-developed and developing countries. Goyal conveyed India’s commitment to resolving this matter while ensuring that utilizing taxes for domestic green initiatives would maintain competitiveness in India’s exports to Europe.

Goyal at the Observer Research Foundation’s (ORF) first edition of the Energy Transition Dialogue in New Delhi on Thursday said, “India’s energy transition has a very large end-to-end dimension and the government is working towards the goal of meeting the country’s energy needs with a clean source.”

According to an official release issued by the Ministry of Commerce and Industry, Goyal said that for the next 30 years, India is going to see a huge amount of growth in the economy and that is going to lead to significant demand for energy in all walks of life, so India’s energy transition has two dimensions: transit from past consumption levels and what we do to meet the needs of this growth.

“In the circumstances that we are in, India has been upping its targets on almost every aspect of the energy transition story by getting clean energy into the system,” he said, adding that India is working on many fronts.

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Sunak wants 2% tax cut before polls

Sunak has previously said he wants to cut taxes but only once the hole in the public finances has been fixed and he has also pledged to halve inflation this year…reports Asian Lite News

Prime Minister Rishi Sunak wants to cut taxes by as much as 2 pence in the pound before the next national election which is expected in 2024, the Telegraph newspaper reported.

Government officials believed that a slower-than-expected fall in Britain’s high inflation rate would not prevent a tax cut from April, the paper said without citing its sources.

Sunak has previously said he wants to cut taxes but only once the hole in the public finances has been fixed and he has also pledged to halve inflation this year.

The Telegraph said the tax cuts under consideration could be introduced via Britain’s National Insurance social security system or personal income tax.

Sunak’s Conservative Party is far behind the opposition Labour Party in opinion polls. Many Conservative lawmakers want Sunak to cut taxes, even as demands grow for more spending on public services, including the health system.

The Telegraph said Sunak wanted to follow up on tax cuts in 2024 by going into the next election with a revived pledge to cut income tax rates by 1p in each year of the next parliament.

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