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The outsider in the race to replace Boris Johnson said it will amount to a 20 percent cut – the largest reduction in income tax in thirty years. But he immediately faced renewed accusations of “flip flops and U-turns” on tax from supporters of his rival for No.10, Liz Truss.
Chief Secretary to the Treasury Simon Clarke, who is backing Ms Truss, warned: “We cannot afford to wait to help families, they need support now. Liz will cut taxes in seven weeks, not seven years.”
A Truss campaign source added: “It’s welcome that Rishi has performed another U-turn on cutting tax, it’s only a shame he didn’t do this as Chancellor when he repeatedly raised taxes.
“He has also made it conditional on getting growth first – knowing full well that his corporation tax rises are contractionary.
“The public and Conservative Party members can see through these flip flops and U-turns.”
The Foreign Secretary has pledged an immediate £30billion in tax cuts if she becomes Prime Minister.
She has promised to freeze corporation tax and reverse the 1.25 percent rise in national insurance to help people with the cost of living crisis.
But the ex-Chancellor insists his number one priority is to tackle inflation by getting borrowing under control and implementing reforms to improve productivity. His income tax plan won’t come until the end of the decade.
Ms Truss has previously said Mr Sunak’s economic plans will drive the country into recession.
With ballots being sent out to Conservative party members this week Mr Sunak suggested Ms Truss was being “dishonest” with voters with promises of sweeping tax cuts and engaging in an “act of self-sabotage that condemns our party to defeat” at the next general election.
While Mr Sunak said the policy is part of his “radical” tax vision, it builds on his previously-announced 1p cut to income tax in April 2024.
The deadline for taking off the additional 3p – the end of the next Parliament – could be as late as December 2029.
Tax has dominated the bitter race for No 10, in which the former chancellor has repeatedly called Ms Truss’s tax-cutting plans “comforting fairy tales”.
But Ms Truss’s proposals appear to have convinced many of the party faithful who will elect the next leader – with polls suggesting she has a clear lead over Mr Sunak – and a growing number of senior Tory MPs, with Tom Tugendhat saying her proposed cuts were based on “true Conservative principles”.
In announcing his new personal tax policy, Mr Sunak again emphasised the need to control inflation before reducing taxes and suggested his rival’s plans would fuel inflation.
He said: “What I’m putting to people today is a vision to deliver the biggest income tax cut since Margaret Thatcher’s government.
“It is a radical vision but it is also a realistic one and there are some core principles that I’m simply not prepared to compromise on, whatever the prize.
“Firstly I will never get taxes down in a way that just puts inflation up. Secondly I will never make promises I can’t pay for. And thirdly I will always be honest about the challenges we face.
“Because winning this leadership contest without levelling with people about what lies ahead would not only be dishonest, it would be an act of self-sabotage that condemns our party to defeat at the next general election and consigns us to a long period in opposition”.
The 1p income tax cut he announced at the Spring Statement is fully costed and paid for, according to Mr Sunak’s campaign.
Each subsequent penny off, which would cost about £6 billion a year, would be funded through tax receipts generated by forecast economic growth and would not see the debt burden rise.
The ex-chancellor’s U-turn on tax last week, when he promised to temporarily slash VAT on energy bills, seemingly failed to give him any significant boost in polling of Tory members since.
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