Tory leadership hopefuls’ promises to bring forward the planned income tax cut will not help “those in real financial need”.
That’s according to Tim Sarson, head of tax policy at KPMG UK, who shared his thoughts exclusively with City A.M. on what the eventual winner of the contest and the long-term chancellor need to prioritise.
Most of the remaining Conservative leadership contenders, apart from ex-chancellor Rishi Sunak, have pledged to ease the UK’s tax burden immediately.
Penny Mordaunt, the favoured candidate among Tory party members, has promised to scrap Sunak’s freezing of income tax thresholds for several years, effectively amounting to a tax cut.
Sarson said tweaking income tax is not “a very cost-effective” way to support the poorest as the benefits typically accrue to higher earners.
Lawmakers need to avoid making knee jerk politically motivated tax decisions to give firms clarity.
“One of the biggest sources of angst for businesses in recent years has been instability in the tax system,” Sarson said.
The comments come as shadow chancellor Rachel Reeves today said years of economic underperformance under successive Conservative governments has forced policymakers “to raise taxes because you’re not getting those proceeds of growth”.
She promised a Labour government would tackle Britain’s structural economic imbalances by “addressing deep rooted supply-side problems”.
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