(qlmbusinessnews.com Tues, 21st Nov, 2023) London, UK —
Tax Cuts Loom as UK Inflation Eases: Rishi Sunak Signals Economic Pivot
Prime Minister Rishi Sunak has announced that the government is poised to implement tax cuts following a slowdown in the pace of inflation. Sunak, satisfied with the achievement of halving inflation, stated that taxes would be reduced in a “responsible way,” with further details to be disclosed in the upcoming Autumn Statement on Wednesday.
While avoiding specifics on potential changes to individual taxes, Sunak highlighted that the government was ready to progress to “the next phase” of its economic growth plan. Last week, the government fulfilled its commitment to halve inflation, attributing the decline to lower global energy prices.
Despite the external factors influencing the inflation drop, Sunak emphasized that the government had made challenging decisions, including resisting inflationary pay rises in response to strikes. He asserted that the time had come to focus on cutting taxes in a responsible manner.
The UK's tax levels are currently at their highest in 70 years, as noted by the Institute for Fiscal Studies. With the Conservative Party trailing in polls and a general election expected next year, the government faces internal pressure to enact tax cuts.
While Sunak did not confirm the precise areas for tax reductions, he expressed a desire to prioritize “rewarding hard work,” suggesting that national insurance could be a likely candidate. He also underscored the importance of avoiding actions that could fuel inflation.
Referencing his predecessor Liz Truss, Sunak pledged not to repeat the “economic mistake” of the previous year's mini-budget and cautioned against “unfunded tax cuts.” On welfare changes, he mentioned a desire to reform the system to ensure that “work always pays.”
The Prime Minister's speech outlined a commitment to helping people secure employment and cracking down on welfare fraud. Although Chancellor Jeremy Hunt had contemplated inheritance tax cuts, the focus of the Autumn Statement is expected to be on promoting economic growth.
The government anticipates placing a spotlight on business taxes, viewing them as essential to fostering economic expansion. Sunak expressed the government's intention to support businesses by facilitating lower taxes and simpler regulations to encourage investment, innovation, and growth.
In outlining “five long-term decisions” for the economy, Sunak emphasized reducing debt, cutting taxes, sustainable energy development, supporting British businesses, and delivering world-class education. Opposition figures, however, questioned the government's credibility in delivering on its pledges, citing past failures.
Despite initial skepticism about tax cuts this autumn, the government now finds itself with potentially substantial resources—up to £25 billion—as a result of lower-than-expected tax receipts and inflation adjustments. As the nation awaits Wednesday's Autumn Statement, the government remains focused on its economic agenda and growth initiatives.
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