Rishi Sunak was at the centre of a row on Thursday as he made a public commitment to lower taxes but resist calls to scrap the National Insurance hike.
He used a major speech to insist he wants to create a “lower tax economy” despite raising National Insurance for millions of workers.
National Insurance rates increase by 1.25 per cent on April 1, adding £214 to the tax bill paid by someone earning £30,000 a year and £464 to someone earning £50,000 a year.
The rise in energy bills, the 4.8 per cent hike in Tube and bus fares and 3.8 per cent rise in rail fares have all added to concerns about the cost of living.
Today, giving the annual Mais Lecture to the Bayes Business School in London, Mr Sunak declared his intention to make “difficult and often unpopular arguments” on spending, hinting at a determination to resist any demands to axe the NI hike.
But he insisted that cutting taxation in the future needs to be done in a “responsible way”. He said: “I firmly believe in lower taxes. The marginal pound our country produces is far better spent by individuals and businesses than government.
“I am going to deliver a lower tax economy but I am going to do so in a responsible way, and in a way that tackles our long-term challenges.
“Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere.”
Opposition MPs and some backbench Tories have called for him to scrap the hike to ease the financial burden on households and businesses at a time of rising costs. Labour seized on the speech to accuse Mr Sunak of hypocrisy.
Shadow chancellor Rachel Reeves said: “The hard facts are that Sunak has hit households and business with 15 tax rises in two years in post, with an unfair National Insurance rise down the line, and he has raised the most tax on average per budget than any Chancellor in the last 50 years.”
Tony Danker, director general of the business group the CBI, said setting out how firms could “achieve sustainable growth for the long term” was “vital” at a period of volatility in the economy.
