As the Tory Leadership race continues. The main candidates, from Michael Gove to Jeremy Hunt, have all announced that if they get the keys for Number 10, they will undertake a range of tax cuts to help boost the economy.
As Mrs. May handed in her resignation letter for the leadership of the Conservative Party, a full-on spectacle for who will replace her has kicked into gear.
Boris Johnson remains the favourite amongst Tory grassroots, whilst Rory Stewart remains the doyen of the social media Conservative Liberal bubble, however, the remainder of the pack has started to talk tax policy.
Michael Gove – The Environment Secretary
Michael Gove, one of the front-runners, has announced a plan to scrap VAT and introduce a sales tax – which would move the burden away from business to the consumer.
This, Mr. Gove argues, would give the High Street a chance in a changing digital landscape and would give a modicum of balance between the digital giants and the troublesome High Street.
Jeremy Hunt – Foreign Secretary
However, Jeremy Hunt wants to “turbo-charge” the UK economy by following Donald Trump’s model of aggressive tax cuts.
He believes that a no-deal Brexit would be suicide and that by leaving the EU via Mrs. May’s Withdrawal Agreement the Government could use the £26bn no-deal war chest immediately along with a planned cut in tax to corporation tax – reducing it from 19% to 12.5% (in-line with the Republic of Ireland).
Mr. Hunt believes that instead of deriding Trump, we should follow his lead. We will await his clarion call of “Let’s Make Britain Great Again”!
Sajid Javid – Home Secretary
Sajid Javid – or “The Saj” as he likes to be known – wants to “inject dynamism” into the economy by removing the 45p rate of income tax – the rate that applies to earnings of over £150,000 a year, if he wins the Tory leadership race.
Mr. Javid believes it unfairly hits doctors, head teachers, and other key workers within our communities. However, detractors of the policy point out that only 3-4% of taxpayers pay this rate.
Mr. Javid also wants to cut basic rates too but believes the higher rate could help inject a boost into the wider economy. However, data seems to suggest that only 1-2% of the highest earners would be affected by this move.
Dominic Raab – Former Brexit Secretary
The Brexit Secretary who agreed May’s Withdrawal Agreement who then disagreed with the very same agreement he agreed with originally is now one of the seminal “No-Brexit” frontrunners in the race.
Raab wants to cut income tax by a penny over the course of Parliament meaning a reduction from 20p to 15p over a 5-year course – one of the lowest rates in modern taxation history. An average salaries person on £29,600 – would save £854 a year.
However, high earners would save even more. Mr. Raab also wants to increase the National Insurance threshold to £12,500 in line with the tax threshold allowing average families to take home over a thousand pounds a month tax-free.
Whoever wins the coveted Tory leadership race to become the next Prime Minister of Great Britain and Northern Ireland will face a plethora of issues – with Brexit taking centre stage.
However, we will have to see how much “dynamism” these tax cuts can inject into an economy still functionally reeling from austerity and the longest squeeze on wages for nearly a hundred years.
The challenging times ahead will create further pressures on business and personal finances – Prestige Business Management can help you navigate the upcoming rocky terrain by providing insightful and professional financial advice and services. Call Prestige Business Management today on 0203 773 2927.