Boris Johnson signaled on Monday that the government would not prioritize personal tax cuts over other aid to help millions of households during the cost of living crisis.
The Prime Minister stressed that he wanted to introduce tax cuts “as quickly as possible”.
But he said the government’s current focus was on trying to help millions of households cope with the “peak inflation we have to go through right now”.
Economists predict that inflation could soar to more than 10% this year, with the skyrocketing cost of energy and oil.
Speaking on a visit to Cornwall, Mr Johnson said: ‘We are bringing in tax cuts as fast as we can but what we also need to do is look after people in difficult times, so the previous work…the thing we are doing at the moment is looking after people who are facing increases in the cost of living…that’s why we’re putting £1,200 for the eight million most households vulnerable, £400 to everyone in the country to help with the cost of fuel and energy, and an additional £300 for pensioners.
“Yes of course I understand that we have to cut taxes and we certainly will… but the peak inflation that we have to go through right now, take care of people while we go through this and that’s what we’re going to do .”
He pointed out that the threshold for paying National Insurance contributions was being raised next month to £12,570, which will partly offset the 1.25 percentage point rise in this levy which came into effect in April.
However, a number of Tory MPs are pressuring Mr Johnson and Chancellor Rishi Sunak to introduce personal income tax cuts soon, including bringing forward the 1 pence cut to the basic tax rate. income tax from its planned introduction in 2024, just before what is widely expected to be the next general election.
Mr Sunak has signaled tax cuts for businesses in the fall, although the corporate tax rate will be raised, but he has limited room to maneuver given the severe blows that public finances have taken suffered during the Covid pandemic, without simply borrowing more and putting more economic burden on future generations.
According to forecasts by the Organization for Economic Co-operation and Development, the UK economy will come to a standstill next year, and will be the slowest in the group of wealthy G7 countries (US, UK, Germany, France, Japan, Italy and Canada).