British Chancellor Jeremy Hunt has said that he will bring down taxes “in a responsible way” that would not hamper the government’s “progress” on tackling inflation.
Mr Hunt faced questions about government spending plans on Sunday, as he prepares to release the autumn statement next week.
The government had met its target of halving inflation this year from 11 per cent to 4.6 per cent, according to the Office of National Statistics. Mr Hunt stressed he was still working to get it down to 2 per cent as advised by the Bank of England. “Things are tough, we’re not out of the woods yet,” he said.
The Chancellor is expected to be considering tax cuts on income, inheritance and business. Yet speaking to to the BBC, he declined to comment on the specific measures that he was planning to introduce.
“I’m not going to sacrifice the progress we’ve made bringing down inflation. Inflation is also a tax, it eats away at your earning power,” he said.
UK taxes have been at their highest, with an additional 1.61 million people paying a higher rate of income tax, and 2.2 million people paying the basic rate of income tax which they hadn’t paid previously, according to government figures.
Asked by BBC presenter Laura Kuenssberg why the government had been “piling tax” at “record levels” on to “ordinary working people”, Mr Hunt insisted that he had taken “difficult decisions” to bring down inflation at the expense of tax cuts.
Instead, he said he would be prioritising “the long-term growth of the economy”. “There's too much negativity about the British economy. There is a sort of defeatism. Actually, when you look at it, there's a lot going for it.
“One example, the sector that is going to define all of us in the next 20 years, the technology sector, we have just become the third largest in the world after the United States and China. That is going to be a tremendous strength going forward for the UK.”
He added that Wednesday's statement would be “consistent” with his earlier measures to “control debt” and the Prime Minister's priority to “see debt falling.” “Nigel Lawson said that borrowing is a deferred tax, it's just pushing a tax on to future generations and he was absolutely right,” he said.
Speaking to Sky News, Mr Hunt said that lower tax was “essential to growth”, but declined to comment on specific cuts. "[Tax] is too high [and] the Conservative government wants to bring it down because we think that lower tax is essential to growth,” he said. “I want to bring down our tax burden. I think it is important for a productive, dynamic, fizzing economy that you motivate people to do the work [and] take the risks that we need.”
Responding to speculation that Mr Hunt would be introducing inheritance tax cuts in his autumn statement, shadow chancellor Rachel Reeves said it was “not the right priority”.
“Cutting inheritance tax in the middle of a massive cost of living crisis, and when public services are on their knees is not the right priority,” Ms Reeves told the BBC.
“I understand people’s desire to pass on to their children what they’ve worked hard for. But that is not the right thing to do,” she added.
Asked whether Labour would pledge to reverse a potential cut to inheritance tax in its manifesto, Ms Reeves said she would “set out all of our plans” when the time came. “I don’t want to write the [Labour] manifesto here on your programme. But this is not a priority for me, I don’t think it’s the right thing to do.”
Ms Reeves added that Labour would raise benefits in line with September inflation figures if elected.
Asked what she would do if Labour inherited a situation where they have gone up by less than that, the front-bencher said: “The election is likely to come in a year's time and the Government will have already implemented that, but in government, I will use the inflation rate that is traditional, the September inflation, to uprate benefits.”
She added: “If you pick and choose from year to year which inflation number is the cheapest thing to do, then what you see is the gradual erosion of people's incomes.”