JEREMY Hunt risks the fury of hard-working Brits and Tory MPs insisting tax cuts may not be “affordable” at the Budget.
The Chancellor appeared to dampen expectations of reducing the 70-year high tax burden saying it was “too early” to make definite plans.
The warning shot comes after he and Rishi Sunak have both dropped strong hints that taxes are to be cut on March 6.
His so-called headroom for tax cuts could be just £14 billion which is less than the £20 billion analysts were suggesting last week.
Mr Hunt said: “It is too early to know whether further reductions in tax will be affordable in the Budget, but we continue to believe that smart tax reductions can make a big difference in boosting growth.”
The Chancellor used a recent interview to liken himself to tax-cutting Chancellor Nigel Lawson who introduced major reform to the City of London.
He raised expectations earlier this month when talking about the economic situation, saying: “The plan is working. That’s why we need to stick to it. It means cutting taxes, not raising them.”
Mr Hunt also said the “the direction of travel” was to follow in the foot-steps of low tax economies such in North America and Asia.
Prime Minister Rishi Sunak has also said there is “more to come” in terms of tax cuts in a hint of pre-election giveaways for workers.
He added that levies will be reduced “when we can responsibly do so”.
Ex-Cabinet Minister David Jones told The Sun: “Politically and economically we need to reduce the tax burden. Colleagues very much hope that the Chancellor will do precisely that.”
His comments came as he responded to the International Monetary Fund’s economic outlook for the UK. They suggest eliminating loopholes in wealthy and income tax.
Ministers must also reform the pensions triple lock, the organisation warn, saying they advise “against further tax cuts”.
The body says the The UK economy will grow more slowly than expected over the next two years – and among the worst performers in the G7.
Their economists expect UK growth to hit 0.6 per cent this year, and 1.6 per cent next year. This is a downgrade of 0.4 per cent for next year.
They say the global economy is expected to grow by 3.1% this year and 3.2% next year.
Mr Hunt added: “The IMF expect growth to strengthen over the next few years, supported by our introduction of the biggest capital investment tax reliefs anywhere in the world, alongside National Insurance cuts to improve work incentives.”
But Darren Jones, Labour’s Shadow Chief Secretary to the Treasury, said the figures were evidence of “economic failure”.
He added: “It’s time for change. We need an election now to give the British public the chance to vote for a changed Labour Party that will change Britain for the better.”
