CALLS for tax cuts are building as the British economy finally starts to recover from years of stagnation, with politicians and business groups arguing that the time is now right to trim back the tax system.
Deputy Prime Minister Nick Clegg said yesterday morning that he wants to push the coalition government’s income tax cuts even further than currently planned.
Clegg now says he will strive to raise the income tax threshold to £10,500 in the 2014 budget, meaning a £100 tax cut for the majority of workers. The coalition has already agreed to raise the income tax threshold to £10,000 by the next election.
The British Chambers of Commerce (BCC) also announced a proposal for tax cuts, saying that business rates needed to be frozen.
BCC director general John Longworth said that chancellor George Osborne’s impending Autumn Statement was the perfect opportunity to overturn the current system of rates: “That way, businesses can put more money into driving economic growth, which benefits the UK far more than the cost to the Treasury.”
On the BBC’s Andrew Marr show, the Lib Dem leader insisted that the government now has room for tax cuts after recent growth: “Now the recovery is finally taking hold it’s very important that as many people as possible feel they are benefiting.”
Research released by Markit today suggest such a cut in tax would be welcome news for the UK’s squeezed family budgets. Nearly a third of households have reported a deteriorating financial situation this month, while only seven per cent saw an improvement.
Meanwhile, a group of Tory MPs, aligned with the Free Enterprise Group of parliamentarians, are today expected to call for much broader tax cuts, including for the middle classes, at a meeting at the Institute of Economic Affairs. And on Thursday, October’s public sector borrowing figures will be announced, which are now expected to be favourable to the Chancellor.