Liz Truss signals further tax cuts towards economic growth | Economic policy

Liz Truss has indicated that further tax cuts may be on the way as she aims to boost economic growth in the face of the biggest economic storm the UK has experienced in a generation.

In Friday’s mini-budget, the government plans to cut national insurance policies and scrap a planned corporate tax hike in a bid to reduce a record tax burden.

Kwasi Kwarteng, the new chancellor, is expected to announce the creation of a network of low-tax, low-regulated investment zones, and there may be changes in corporate rates.

However, Truss’s comments for this week’s “tax event” suggest she could be willing to go even further in the coming months, with a full budget expected in November.

She told reporters that the “number one thing” she wanted to achieve was economic growth, adding, “Lower taxes lead to economic growth, I have no doubt about that.”

She said: “Having the highest taxes in 70 years and levying corporate taxes at a time when we are trying to attract investment to this country is not going to generate growth. We have to be competitive.”

Truss appeared to champion controversial plans, expected to be confirmed Friday, to remove a cap on bankers’ bonuses, admitting: “Not every measure will be popular.”

She said: “There are always vested interests, people who are against measures that increase economic growth, but what is important to me, what is important to the Chancellor is that people have more opportunities, there is more investment, there are jobs with higher wages. We are prepared to make that argument. This is about increasing the pie.”

The prime minister admitted that the government needed to take “other measures” to boost economic growth, such as investing in projects such as broadband.

However, she has clearly prioritized tax cuts as a means of increasing productivity, although economists have argued that government should also focus on infrastructure, investment, skills and wages.

Truss said she was willing to make the argument that pursuing growth should be her only priority when asked if she was taking a huge gamble with the economy.

“The most important thing we have to deliver as a government, and really as a country, is economic growth,” she said. “Since the financial crisis, we have seen relatively low levels of economic growth and without economic growth we cannot provide people with a better life, whether through higher wages or money that can go to public services such as the NHS or education.”

When asked what she planned to do to help struggling families with her mini-budget, she replied: “What’s important is what makes Britain more competitive.”

Truss said she wanted to achieve a higher wage economy where the average worker is currently earning about £9,000 a year less as a result of more than a decade of stagnation.

Some Tory MPs think Kwarteng could even bring forward by a year the promise of his predecessor Rishi Sunak, then chancellor, to cut income taxes by 1% from 2024.

The Truss team also spoke with business groups about changes to corporate rates and VAT cuts to help resolve the energy crisis, as well as a longer-term review of these taxes.

Leave a Comment