Liz Truss launches leadership bid with tax cut challenge to Rishi Sunak

[ad_1]

The reference to bringing down the size of the state indicated that Ms Truss intends to lower current public spending, which is forecast to reach a 50-year high.

It is understood Ms Truss will launch a spending review if she wins office, reopening a three-year agreement that Mr Sunak signed off as chancellor last year.

She also wants to bring forward the budget, which is currently pencilled in for November, according to an ally, with tax-cutting plans to be pursued as soon as she would enter Number 10.

Scrapping the rise in corporation tax from 19 per cent to 25 per cent due in April and reversing the 1.25 per cent increase in National Insurance, which kicked in this spring, would cost the Treasury tens of billions of pounds.

Ms Truss indicated that she would fund the move by bringing down public debt over a longer timeframe than Mr Sunak, who wants it falling by 2024.

The tax position is at direct odds with Mr Sunak’s stance. He has argued now is not the time for big tax cuts, given the need to bring down inflation, which is forecast to reach 11 per cent this year.

The UK is experiencing stagflation – both swaring prices and stuttering growth. Consensus among economists is that tax cuts fuel inflation, but they could also boost growth.

The battle over economic approach and timing looks set to be the central struggle as candidates vie to become the next prime minister.

.

[ad_2]