Chancellor hints Tories may abandon tax pledges

22 Apr

Speaking at an International Monetary Fund meeting in Washington, Philip Hammond said the vows made at the time of the last General Election “constrained” the Government’s ability to manage the economy effectively.

However, Mr Hammond stressed he had “no ideological desire to raise taxes”.

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Following on from his debut Budget last month, the Chancellor was forced to make a U-turn on plans to increase National Insurance for millions of self-employed people because it breached a promise made by David Cameron’s campaign two years ago.


Skynews

Video:
Hammond: There will be no NI increases

The reversal left Mr Hammond with a headache, as the 2% rise to Class 4 National Insurance contributions was meant to raise £2bn for social care.

In 2015, the Tories had pledged to cut income tax for 30 million people – taking those who earn less than £12,500 out of income tax altogether through increases to personal allowances.

Mr Cameron’s administration had also vowed to increase the 40p tax threshold so that those who earn less than £50,000 a year would only pay the basic 20p rate of income tax.

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It is not known whether these taxes could face increases if the pledge is withdrawn when the Tories release their 2017 manifesto in the coming days.

Sky’s Business Presenter, Ian King, said: “There was a column in The Times newspaper by the director of the Institute for Fiscal Studies who said it would be unwise for whoever wants to be the Chancellor to tie their hands in this way.

“The Government essentially has four main levers it can pull in terms of raising taxes: income tax, national insurance, VAT and corporation tax.

“The Government is committed to lowering corporation taxes to ensure the UK economy remains competitive and an attractive investment destination, so that leaves the other three taxes that George Osborne pledged not to raise the rates on.”

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