UK Finance Minister Hunt rules out short-term tax cuts

LONDON, Sept 30 (Reuters) – British Finance Minister Jeremy Hunt ruled out short-term tax cuts ahead of a mid-year fiscal statement due on Nov. 22, but said in a newspaper interview that he wanted avoid “a vicious circle as always.” -tax increase”.

Many lawmakers in Britain’s ruling Conservative party want Hunt to deliver tax cuts before the next election, as his party trails far behind the opposition Labor Party in opinion polls.

“We are not in a position to talk about tax cuts at all,” Hunt said in a interview with The Times newspaper, ahead of his Conservative Party’s annual conference, which begins on Sunday.

Throughout this year, Hunt has said his priority is supporting Prime Minister Rishi Sunak’s goal of halving inflation, rather than cutting taxes, and in a Bloomberg TV interview earlier this month he said that the tax cuts were “unlikely”.

“The question we have to answer for the British people is: what are they doing to put themselves in a position where they can credibly lower taxes?” Hunt told the Times.

On Friday, the Institute for Fiscal Studies, a nonpartisan think tank, saying Tax revenue is likely to account for 37% of annual economic output by the time of the next election due in 2024, up from 33% in 2019, when the Conservatives last won an election, under then-Prime Minister Boris Johnson. .

This would be Britain’s highest tax rate since at least the 1950s, although below most other similar European economies.

Liz Truss, another former Prime Minister, was among several Conservative lawmakers who pledged on Saturday that they would not support “any new taxes that would increase the overall tax burden.”

Promises of lower taxes, which are popular with ordinary Conservative Party members, helped Truss defeat Sunak in a party leadership contest between July and September 2022.

He resigned in October 2022 after just 44 days in office, when his plans to reverse tax rises and spend more on energy subsidies caused the government’s borrowing costs to rise, forcing intervention from the Bank of England. .

Hunt said greater investment in technology was needed in public services to boost the output of existing staff, rather than the more popular approach of focusing on staff numbers.

“We need to find a formula that doesn’t mean we’re in a vicious cycle of ever-increasing taxes,” he said.

Finance Ministry estimates suggested the annual growth rate of public sector productivity needed to be 0.5 percentage points higher to stabilize Britain’s tax burden, he added.

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