The two contenders to be the next Conservative party leader – and the next Prime Minister – continued their campaigns this week. Both former foreign secretary Boris Johnson and the current foreign secretary Jeremy Hunt spoke less about tax this week than in previously weeks. They have to convince the 160,000 party members to vote for them, with the final result to be announced during the week of 22 July. There will be a head-to-head debate on ITV on 9 July.
According to a report in today’s Times, “Boris Johnson is preparing an emergency budget for a no-deal Brexit, including aggressive tax cuts, an overhaul of stamp duty and an assault on regulation if he becomes prime minister”.
Somewhat confusingly, while billing it as a ‘non-deal Budget’, the paper – which claims to have spoken to three ‘senior sources’ from the Johnson campaign – says the emergency Budget would ‘likely be brought forward to September’ and would be designed ‘to ensure that the economy is “going gangbusters” by October 31, putting Britain in the best position to leave the EU with or without a deal.’ (Our italics.)
Measures reportedly being considered for the emergency Budget include:
- An £11 billion-a-year proposal to increase the national insurance contribution threshold from £8,632 to £12,500
- Abolishing stamp duty on homes worth less than £500,000
- Reversing George Osborne’s stamp duty increases on more expensive homes
- A ‘Trump-style’ moratorium on all new regulations
- Raising the threshold for the annual investment allowance significantly above the present level of £1 million to promote business
These plans, which will reportedly be considered by Johnson and his campaign team next week, are in addition to Johnson’s existing publicly-stated ambition to cut income tax for people earning more than £50,000 by raising the 40 per cent tax threshold to £80,000.
The Times also reports that Johnson has offered the job of Chancellor to Sajid Javid, the current Home Secretary. During the leadership contest Mr Javid outlined plans for an emergency “no-deal budget” that “would include significant tax cuts for business, for personal income [and] stepped-up infrastructure investment”.
On Brexit, in an interview with the BBC, Johnson insisted there are plenty of checks that you can do away from the border if you had to do them without any kind of hard infrastructure at the Northern Ireland frontier. And he said the ‘commonsensical’ thing to do is to prepare for a WTO exit.
Johnson has said he is against a ‘Milkshake Tax’ (government plans to extend the sugar tax on soft drinks such as Coca-Cola onto “sugary milk drinks), saying this week: “I am very, very reluctant to impose new taxes disproportionately on those on low incomes. A new tax on milkshakes seems to me to clobber those who can least afford it.”
At a hustings debate yesterday Johnson said that he would be “very, very progressive” on taxation, but added: “I believe strongly in living within our means.”
In an interview with the BBC this week, Jeremy Hunt said he wants to cut taxes on ordinary people so that people can take more money home at the end of the month. He had already expressed his wish to increase the threshold at which workers pay National Insurance to at least £12,000 a year. Hunt also told the interviewer that he would follow a fiscal rule that is very clear that debt will continue to fall as a proportion of GDP over the cycle.
Asked to justify his policy of reducing corporation tax to 12.5 per cent, Hunt said that when the Irish made the move a number of years ago to cut their corporation tax rate to 12.5 per cent their GDP per head was lower than ours. Now it's nearly 50 per cent higher than ours.
Asked about Theresa May’s Brexit plan, Hunt said that he would change the backstop with some guarantees that we're not going to have a hard border on the island of Ireland. The Foreign Secretary claims a technology-led solution to borders will help because ‘everyone thinks that within the next decade we aren't going to have big border checks when it comes to goods because we're going to do all these things online’.
Hunt also said this week that he wants to ‘turbocharge’ our economy and take advantage of Brexit, by backing the young entrepreneurs who take risks and create jobs. The move will save newly exempted businesses up to £6,500 each, and will scrap taxes on 24,500 businesses based in Birmingham (5,000), Manchester (8,000), Leeds (6,000), Newcastle (2,000) and Bristol (3,500), the media report. He would achieve this by reform the current Retail Discount rate, so that businesses which qualified for the discount would see their entire business rate bill cancelled.