The government still wants to cut taxes before the next General Election, Tory party chair Nadhim Zahawi has said.
Zahawi said Jeremy Hunt “wouldn’t have a hope in hell” of cutting taxes before inflation dramatically reduces, but that the chancellor’s priority is to slash the tax burden once it has.
Hunt moved to hike taxes for everyone on Thursday in a bid to bring down government debt, which has increased the UK’s tax burden to its highest level since World War II.
Stealth income tax hikes are set to squeeze families, while businesses will pay more in National Insurance Contributions as the government tries to balance the books.
The Bank of England has predicted inflation will drop to the central bank’s 2 per cent target by 2024 – which is when the next election is expected.
Zahawi told the Telegraph: “There isn’t a cigarette paper difference between any of us around the cabinet table because we take collective responsibility that we do want to bear down on the tax burden.
“But we have a challenge today, which if allowed to take hold, to embed, will be deeply damaging. We wouldn’t have a hope in hell of being able to do anything to bear down on taxation if we don’t deal with inflation in the first place.
“And that’s what I think we will do, and when we come out the other end of that I’m sure Jeremy Hunt’s priority will be to start looking at what more we can do to help people with the tax burden.”
There are already murmurings of an upcoming Tory backbench rebellion on the statement from Liz Truss supporters, who supported her swingeing tax cuts and are disturbed by this new economic direction.
Conservative MP Jacob Rees-Mogg, now on the backbenches, said Hunt took the “easy option” to put up taxes.
One senior Tory MP told City A.M. after the statement that Hunt and Rishi Sunak “have killed the concept or argument of a Conservative way of an economy”.