Sunak promises biggest tax cut for 30 years as he bids to overhaul Truss's lead

1 August 2022, 06:52

Rishi Sunak has promised to make the biggest income tax cut in 30 years as he bids to overhaul Liz Truss's lead in the Tory leadership race.

The former chancellor said he will slash the basic rate of income tax from 20% to 16% if he wins the keys to No10 – leaving millions of households paying a fifth less.

But the cut would not come in until the next Parliament – some time between the next general election, scheduled for 2024, and the following election, which would be held up to five years after.

"What I'm putting to people today is a vision to deliver the biggest income tax cut since Margaret Thatcher's government," Mr Sunak said.

"It is a radical vision but it is also a realistic one and there are some core principles that I'm simply not prepared to compromise on, whatever the prize."

However, Simon Clarke, the Truss-backing Chief Secretary to the Treasury, hit back: "Liz will cut taxes in seven weeks, not seven years."

A Truss campaign source added: "It's only a shame he didn't do this as Chancellor when he repeatedly raised taxes.

"He has also made it conditional on getting growth first - knowing full well that his corporation tax rises are contractionary.

"The public and Conservative Party members can see through these flip flops and U-turns."

Read more: Sunak says he had 'no choice' as he is accused of 'stabbing Boris in the back'

Nadhim Zahawi, who replaced Mr Sunak as Chancellor after the latter quit Boris Johnson's Government, wrote in The Daily Telegraph: "Liz understands that the status quo isn't an option in times of crisis...

"We need a 'booster' attitude to the economy, not a 'doomster' one, in order to address cost-of-living woes and the challenges on the world stage.

"Liz will overturn the stale economic orthodoxy and run our economy in a Conservative way."

Economic policy has become the main dividing line between both candidates in their campaign to replace Boris Johnson.

A poll in late July had Ms Truss leading by 62% to 38% among Tory members.

Mr Sunak has said tackling inflation is the main priority and tax cuts will need to wait, and has cautioned against policies that could require borrowing, while Ms Truss has called for tax cuts to stimulate economic growth.

Read more: Truss says no gender surgery for kids as Sunak accused of 'stabbing Boris in the back'

Mr Sunak was accused of U-turning last week when he supported a temporary slash in VAT on energy bills. He has also announced plans to impose £10 fines for people who miss GP appointments and wants to tackle "woke nonsense".

Meanwhile, Ms Truss has pledged to cut red tape for farmers and resolve labour shortage issues that emerged after Brexit, and announced plans to automatically invite pupils with top A-level grades to apply for top universities.