PM faces pressure from within his own ranks to scrap 'tax on tax'; Photo: STEPHAN RUSO/AFP
Rishi Sunak has come under pressure to scrap inheritance tax entirely as three former Cabinet ministers demanded there should be no half measures.
Sir Iain Duncan Smith, Sir Jacob Rees Mogg and David Jones called on the Prime Minister and Chancellor Jeremy Hunt to scrap the tax entirely as part of the March budget package to revive the Conservatives' fortunes ahead of next year's general election.
Their The intervention followed speculation that Mr Hunt could cut the headline rate from 40p to 20p only after Downing Street played down the prospect of scrapping it entirely.
This is sparking a fight within the party with other Tory MPs arguing that the Chancellor and Prime Minister should instead prioritize cutting income tax by raising the threshold at which workers pay the 40 per cent rate.
They are clashing with numerous demands for tax cuts including the removal of VAT on domestic fuel, raising the threshold at which small businesses must pay VAT from £85,000 to £250,000, and longer fixed-term mortgages to help first-time buyers.
Ordinary workers “fell into a tax trap”
Sir Ian, the former party leader and former work and pensions secretary, said getting rid of inheritance tax would create a clear dividing line with Labour. “I would give it up altogether. Messing with tariffs is a waste of time. The political impact will be huge,” he told the Telegraph.
“It’s a tax on a tax and 80 per cent of the population don’t like it. Even if they don't pay it, they want to be able to pass the assets on to their children.”
Mr Jones, a former Welsh secretary and Brexit minister, said the chancellor should review “every tax”. and push for growth, but the political advantage of abolishing inheritance tax was “extremely powerful” as Labor was unable and unwilling to follow the government's lead.
“This is increasingly affecting middle-income people due to financial difficulties. The £325,000 threshold has not changed since George Osborne was Chancellor. To keep pace with inflation, that would be £520,000,” he told the Telegraph.
“People on average incomes are falling into a tax trap. From a conservative point of view, this would be extremely attractive.”
Sir Jacob, a former business secretary, said inheritance tax was a “pernicious and bad tax” that should be scrapped because it led to “misallocation of capital and undermined economic progress”. and investment.”
This has encouraged businesses to invest in areas that limit their tax burden, for example by choosing a smaller company over a FTSE 100 firm.
“This means that money is not being used as productively as it should be. It is not investing in the things that will take the economy into the next century. That's why it's a bad tax. It's time to scrap inheritance tax in the spring Budget,” he told GB News.
Although inheritance tax, which applies to estates worth more than £325,000, is paid on a relatively small proportion of estates, it is widely seen as an encroachment claims, and opinion polls regularly rank it as the most hated tax in Britain.
Without reform, forecasts from the Institute for Fiscal Studies predict that revenues will more than double from £7 billion to £15 billion over the next decade. The average bill is already £214,000.
One senior MP said he was concerned that the Prime Minister's business background meant he would seek a middle path rather than scrap the tax. “He has spent a career in transactional work, where you have to give a little to get a little back,” they said.
Sir John Redwood, a former Cabinet minister, said his priority would be to reduce energy consumption. taxes, including a suspension of VAT on domestic fuels as it would help tackle inflation and boost economic growth – two promises made by the Prime Minister.
He said the VAT threshold for businesses should be raised from £85,000. as this prevents small businesses and self-employed businesses from expanding, and the 40 percent income tax threshold should be increased.
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