Hunt considers cuts to national insurance and vaping tax in Budget

Rishi Sunak and Jeremy Hunt speak at a cabinet meeting at the East Yorkshire plant on Monday

Jeremy Hunt is considering cuts to National Insurance , not income tax, in next week's Budget and could announce a tariff on vaping products, reports suggest.

The Chancellor has delayed planned cuts to income tax and stamp duty after official forecasts showed that he will do it. he has less money than expected.

Mr Hunt assured colleagues on Monday evening that he would prioritize «smart tax cuts» that reward working people, Bloomberg reported.

His remarks to One Nation Conservatives came after how the group called on him to win over voters to the party by tackling cost-of-living issues with a budget that would «cut taxes, promote economic growth and put more money back into the pockets of hard-working ordinary people.» /p>

Mr Hunt has already made it clear that he will not be able to cut taxes significantly on March 6th because he will not have the «room» that was in the Autumn Statement when NI was cut from 12p to 10p.

It is expected to cut workers' NI by a further percentage point, costing around £4.5 billion a year. A further freeze on fuel duty is also reported to be a likely option.

Rishi Sunak and Mr Hunt had hoped the 2p income tax cut would help win over voters ahead of the general election.

But The Times suggested the plans, which would cost £13.7 billion a year , are considered unavailable based on the latest data from the Office for Budget Responsibility (OBR).

Whitehall sources told The Telegraph last week that the OBR had done so. The fiscal buffer — the amount of money the government can spend without breaking its promise to achieve debt reduction within five years — is hovering around the same level as it did in the autumn, when it was at an unusually low £13 billion.

The challenge now for Mr Hunt is to find new sources of revenue without putting voters on the sidelines.

It is clear that a “tax on vaping products” is seen as a politically safe option for the Chancellor.

It is clear that a “tax on vaping products” is considered a politically safe option for the Chancellor.

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The new levy will force importers and manufacturers to pay more for vaping liquid, in the hope that the cost will be passed on to consumers and therefore make it less affordable, especially for children.

Tax cuts threaten public services, IFS warns

The Institute for Fiscal Studies (IFS) on Tuesday said the Chancellor should not announce tax cuts in the Budget unless he can show how he will pay for them.

The IFS said current post-election spending plans were already in place. This meant further cuts to vulnerable public services such as local government and the judiciary, which tax cuts would only make matters worse.

The think tank said it was unable to specify exactly what spending cuts would be used to «pay for the cuts». taxes “will not be credible and transparent.”

Martin Miklos, research economist at the IFS, said: «In the November autumn statement, the Chancellor ignored the impact of rising inflation on public service budgets and instead used additional tax revenue to fund large tax cuts.»

«In the next Budget week it may be tempted to try a similar trick, this time betting on higher incomes coming from a larger population, while ignoring the additional pressure a larger population would put on the NHS, local authorities and other services.”

In its analysis, the IFS suggested that the budget deficit could be around £11 billion smaller than forecast in November, but still much higher than forecast in March 2022.

IFS also said that more The rapid population growth forecast by the ONS could boost revenues, but also means current plans see per capita spending rising by just 0.2% in the year after the election.

Given likely NHS spending plans. , defence, schools and childcare meant that other departments would receive around £20 billion a year in real terms by 2028-29, with a further £20 billion a year cut from investment spending.

< Both the IFS and OBR have previously expressed skepticism that the post-election spending cuts will be implemented, with Paul Johnson, director of the IFS, telling reporters that the chancellor was "to some extent... playing by his own financial rules "

Read Telegraph readers' message to Jeremy Hunt ahead of the Budget here