Tory leadership candidates have been challenged to “come clean” on the impact of their tax cuts.
Frontrunners in the race to replace Boris Johnson are competing for the most outlandish tax slashing promises to woo Tory members.
But it comes after experts warned planned tax cuts will benefit high earners five times more than the poorest and cost the country £5 billion.
But their pledges come on top of a planned 1p cut in income tax to take effect from next year - most of which will go to the richest, according to research by the Institute for Public Policy Research (IPPR).
Of the frontrunners remaining in the increasingly bitter race, Liz Truss has made the most expensive promises - adding up to a total cost of £33.2 billion a year.
She announced this week she would cancel a planned 6p rise in Corporation tax, worth £17bn a year.
And she would scrap the £12bn rise in National Insurance designed to plug the NHS funding gap and help hospitals clear the Covid backlog.
She also plans to scrap the ‘green levy’ on energy bills, at a cost to the country of £4.2bn.
Penny Mordaunt has promised a £50 cut on fuel duty, while Tom Tugendhat says he has a 10-year growth plan with “targeted and sensible tax cuts.”
Kemi Badenoch has refused to get into a “bidding war” over tax cuts.
And only Rishi Sunak has ruled out fresh tax cuts until inflation is under control.
But he still backs the 1p reduction in income tax due to take effect next year.
IPPR experts estimate half of a 1p drop in the 20% base rate would go households with the largest incomes with just 2.6% finding its way into the pockets of the poorest.
It would cost the Treasury just over £5bn, meaning a £2.5bn bonus to those already on the highest incomes.
And just £137 million would go to those on the lowest incomes.
Someone earning £50,000 a year would see their tax bill lowered by £374 a year, more than five times more than the £74 a year for someone on £20,000.
Sunak insists he remains committed to lowering taxation but says tackling inflation is a more urgent priority.
The IPPR says cutting taxes would do nothing to help those struggling under the cost of living crisis and that the £5bn gap in public spending would hit services, hitting the poorest hardest.
Henry Parkes, the Institute’s senior economist, said: “Tax cuts are an incredibly inefficient way of getting money to those who need it most.
“There are better ways to use that £5 billion, such as health and social care and strengthening the safety net for the poorest in society.”
Shadow Education Secretary Bridget Phillipson challenged the Tory hopefuls to “come clean” on how their plans for the economy would impact children.
Labour has pledged to scrap the tax free ‘charity’ status for private schools like Eton.
The status makes them exempt from business rates and VAT on school fees.
They say this would raise an estimated £1.7 billion - which would pay for more than 6,500 new teachers, filling vacancies and skills gaps which have opened up under the Conservatives
And Labour leader Keir Starmer has pledged to close tax loopholes like the non-dom status enjoyed by Rishi Sunak’s wife Akshata Murthy,
And writing in the Sunday Mirror last week, he pledged to close the “carried interest loophole” used by hedge fund managers, which the party says would raise £440m a year.
Ms Phillipson said: “Labour is clear: we will tell the public how we will fund every policy we put forward in our plan for government. That’s why we’ve committed to ending tax breaks for private schools so we can invest in the education of millions of children across our country.
“Our plans stand in stark contrast to the billions of pounds of unfunded tax cuts being proposed by Tory leadership candidates. While they are fighting to see who can be most fiscally irresponsible, Labour is focused on delivering for Britain.”
