Liz Truss has today claimed her plan to introduce tax cuts worth £30bn+ would “decrease inflation” as she begins her campaign to win over Tory party members and become Prime Minister.
The foreign secretary denied claims by economists, and her leadership rival Rishi Sunak, that her tax plans would further fuel the UK’s 40-year high 9.4 per cent inflation.
Truss has vowed to overturn a recent increase in National Insurance and cancel a planned increase in Corporation Tax for the UK’s largest firms from 19 to 25 per cent, while also signalling she would be in favour of Income Tax cuts.
Sunak has saidher tax plans, which would be funded by borrowing, are “something for nothing economics” that are more socialist in spirit than conservative.
Truss today said mainstream economists had been “peddling” the wrong theories for decades.
“We have had a consensus of the Treasury, of economists of the Financial Times and other outlets peddling a particular type of economic policy for the last 20 years but it hasn’t delivered growth,” she told the BBC.
“The reason [slashing tax will not be inflationary] is reducing National Insurance and reducing Corporation Tax increases the supply side of the economy. And the reason that we have inflation is it’s a supply shock combined with a slightly loose monetary policy over time.”
Truss and Sunak will compete in a six-week campaign to win over the Tory party’s 200,000 members, after they finished top two in a series of MP votes.
Truss is favourite at the bookmakers due to recent polling showing she is the member’s choice to be the UK’s next Prime Minister.
Truss is running as a candidate from the right of the party and has talked up her now tough stance on Brexit, after voting Remain in 2016, and her hawkish foreign policy.
Sunak is running as more of a unity candidate with support from across the party’s factional divides.
The ex-chancellor tried to paint himself as the true heir to Margaret Thatcher today, after Truss’ attempts to paint herself as Maggie 2.0 in her rhetoric and appearance.
“My values are Thatcherite,” Sunak wrote in the Telegraph.
“I believe in hard work, family and integrity. I am a Thatcherite, I am running as a Thatcherite and I will govern as a Thatcherite.”