New chancellor Nadhim Zahawi has said he has already “set the wheels in motion” to cancel a planned Corporation Tax hike if made Prime Minister as he proposes a swathe of tax cuts to launch his Tory leadership bid.
Zahawi told a Westminster event this afternoon that he would also cut the basic rate of Income Tax from 20p to 19p in 2023 and then to 18p in 2024 if he prevails in the Tory leadership contest.
He will also suspend VAT on energy and all levies on green energy for two years to help people deal with the cost of living crisis.
Fellow contender Sajid Javid also today announced he would scrap the planned increase in Corporation Tax, which would see the UK’s biggest businesses pay 25 per cent instead of 19 per cent, and would also cut the basic rate Income Tax from 20p to 19p next year.
It comes after a raft of Conservative leadership contenders have come out over the weekend to pledge tax cuts if victorious in a bid to undo Boris Johnson’s policies, which increased the UK’s tax burden to its highest level in more than 40 years.
This includes Jeremy Hunt who today said he wanted to cut “all taxes” if made Prime Minister and foreign secretary Liz Truss who promised to slash Income Tax and Corporation Tax in an interview with The Telegraph.
Zahawi said the launch today of the Conservative Way Forward, a pressure group led by senior Tory Steve Baker, was “like the first buds showing on a spring morning after a long winter”.
“Finally after too many years of tax and spending skyrocketing, the political landscape is coming back to sensible policies championed by Margaret Thatcher,” he said.
Javid said during his leadership launch today that the Tories had been plagued by “sleaze, scandal and internal warfare”, adding that the party was facing electoral oblivion.
“This is a ‘wake up and smell the coffee’ moment,” he said.
“It won’t be enough to just have someone else, anyone else, at the helm.”
The 1922 Committee of Tory backbenchers will today announce the timetable for the leadership contest, with a new leader of the party expected to be announced in early September.
There will be a series of votes among Tory MPs until the parliamentary party whittles the field down to the last two contenders.
The last two contenders will then campaign over five or six weeks to win the votes of the 200,000 Tory members who will effectively choose the next Prime Minister.
Former chancellor Rishi Sunak has the most declared support from current Tory MPs, followed by trade minister Penny Mordaunt, Foreign Affairs Committee chair Tom Tugendhat,Truss and Zahawi.
Sunak is the only major candidate not pledging immediate tax cuts, with the former chancellor arguing they would leave a massive hole in the budget and would likely fuel further inflation.
He said during his leadership announcement video that the party must not tell itself “fairytales that might make us feel better in the moment”.
A spokesperson for Sunak said: “Only Rishi can rise to the immense challenges we face, and seize the incredible opportunities before us. He will tackle inflation, get our economy growing, and cut taxes.
“He wants to use the newfound freedoms Brexit has given us, and the new mentality it can give us, to unleash growth by making Britain the best place in the world to invest, cutting regulation and taxes on working people, and radically reforming our public services.”