Hard work should be rewarded with tax cuts, Rishi Sunak has said, telling critics who doubt he can turn his party’s fortunes around that he is “totally up for the fight”.
The Prime Minister hopes a pre-election giveaway, along with an improved economic outlook, will help claw back a heavy opinion poll deficit against Labour.
Sunak’s renewed promise to slash taxes when “responsible to do so” came after his UK tax return was published, showing he paid over £500,000 last year, as his income rose to £2.2m.
Critics pointed out that he paid the same effective tax rate, about 23 per cent of his annual income, as a teacher, despite raking in millions more, as most of his earnings came in the form of capital gains, which is taxed at a lower rate than income.
Official figures next week may show the UK slipped into a technical recession at the end of last year, spelling gloom for Sunak’s pledge to grow the economy.
But, in an interview with the Times, the Tory leader struck an optimistic note, suggesting the UK could once again outperform expectations.
“There is a sense that the country is pointing in the right direction,” he told the newspaper.
“Because economic conditions have improved, because the plan is working, you are starting to see mortgage rates come down and we have been able to cut taxes.
“I do believe those pressures are starting to ease and that hopefully over the course of this year we can continue to make even more progress.”
Chancellor Jeremy Hunt in November announced a cut in national insurance by two percentage points, from 12 per cent to 10 per cent.
Many economists said his autumn statement had factored in implausible squeezes to public spending, while the International Monetary Fund (IMF) said further tax cuts in his March 6 Budget could risk the government’s ability to invest money in the NHS and other services.
Hunt last week sought to temper expectations about the size of tax reductions in his spring Budget, despite clamouring within the Tory ranks for cuts to try to woo voters.
The Prime Minister was also cautious, saying: “None of us ever talk about this stuff before budgets. Other people are. I think they’re over-interpreting. What the Chancellor and I have said is that of course our long-term plan is to cut people’s taxes.”
Amid speculation that the upcoming Budget could see another national insurance cut, Sunak said that “cutting national insurance is a very direct way” to reward hard work.
Sunak is under intense pressure as he has failed to close the opinion poll gap of about 20 points with Labour, and has faced calls from Tory former Cabinet minister Sir Simon Clarke to move aside for a new leader or risk an electoral “massacre”.
He also faces a by-election challenge next week in Wellingborough and Kingswood.
In his interview, the Prime Minister laughed at the idea that Tory rebels were plotting to oust him, insisting: “I’m totally up for the fight.”
Labour Treasury minister Darren Jones said: “Sunak’s words will ring hollow to the millions of families across Britain who have been left worse off after 14 years of Conservative failure.
The former investment banker and hedge fund manager’s vast wealth was highlighted by the release of his tax documents on Friday.
His total income was up 13 per cent from the previous year, rising to £2.2m, and taking his total earnings over the last four years to about £7m.
The statement showed he paid £508,308 in tax in 2022/23. His effective tax rate of 23 per cent is the same as a teacher on a £41,600 annual salary, according to Tax Justice UK.
Press Association – Sophie Wingate
