The two contenders to be the next Conservative party leader – and the next Prime Minister – both announced additional proposals for tax cuts this week, as ballot papers went out to the 160,000 party members.
Boris Johnson has pledged to cut stamp duty to get the ‘locked up’ housing market moving and free up homes for first-time buyers if he becomes prime minister. Johnson told The Telegraph: “I think particularly in London there is clearly a problem with stamp duty and it needs to be addressed. I’m not going to put a figure on how much we’re going to cut but we will certainly be looking to do that because I think actually you can do that in such a way as to increase revenues if you get it right because the market is locked up at the moment.”
Johnson has said he wants to examine whether levies on foods high in salt, fat and sugar are effective, and has vowed not to introduce any new ones until the review is complete. Johnson said ‘sin taxes’ were disproportionately paid by poorer families, and the current evidence that they reduced the consumption of unhealthy foods was ‘ambiguous’.
In a busy week for Johnson, the Conservative leadership favourite confirmed at a Belfast hustings that creating tax-free zones in ports - where goods can be landed in the UK but not be subject to any duties - was part of his vision for the country after Britain leaves in October. Johnson said: “I want to have about six of them. We should definitely be doing free ports and tax free zones. They have delivered around the world, there are about 130 countries who have them. We don't because of our membership of the EU. There are plainly areas that would benefit from them. We will build them all over the place, particularly Northern Ireland.” He also claimed concerns about leaving the EU without a deal were ‘wildly over-done’.
And Johnson gave his view on taxing digital services to a York hustings, saying: “I think it’s deeply unfair that high street businesses are paying tax through the nose... whereas the internet giants, the FAANGs — Facebook, Amazon, Netflix and Google — are paying virtually nothing”. He added: “We’ve got to find a way of taxing the internet giants on their income, because at the moment it is simply unfair.”
Johnson praised President Trump’s tax and other economic policies. “This is a guy who, when all is said and done, has got the US economy motoring along at about 3.6 per cent growth. He’s put in capital allowances for business in a way that I think we should be looking at here, he's cut regulations and he's cut taxes in a way that has driven growth in the US.” He continued: "We Tories, we Conservatives, I think, for too long have failed to talk up the agenda of free market economics, and we've failed to be positive about it...I know that not everybody agrees with everything Donald Trump says or does but on that he is having results, and we should pay tribute to that."
Johnson has previously expressed his wish to raise the higher rate income tax threshold to £80,000 and raise the point at which workers start paying income tax.
Jeremy Hunt has unveiled a 10-year plan to improve the social care system, saying that a government he led would provide incentives for homeowners who build granny flats for relatives. Under his four-point plan, Hunt intends to give carers a greater stake in the system, with families able to apply for tax relief if they choose to adapt or extend their homes to accommodate their relatives’ needs. The proposals will be contained in a long-awaited green paper, which Hunt promises to publish within 100 days of becoming prime minister.
On Johnson’s keenness to reduce sin taxes, Hunt said: "We have an obesity epidemic… So the people who want to scrap these taxes need to say what is their plan.” Hunt added that young people with obesity were facing ‘a really bad start to their life’, explaining: “So that's why you have to have a solution, not just be populist in terms of the taxes you want to cut.”
Hunt told a Surrey newspaper that his Right To Own policy is where ‘we would gift young people land so all they would have to fund is building the house, which is something you can actually afford with a mortgage’. He repeated that his main tax change is to cut corporation tax to 12.5 per cent which is the level they have in the Republic of Ireland, adding: “I want to have what President Trump did in the USA where he cut business taxes and dramatically increased the growth rate of the economy. If our growth rate increased from 1.5 per cent now to the three per cent they have in the United States - that would be an extra £20 billion available for public services like the NHS, defence spending or tax cuts. The first priority of a Conservative is to grow the size of the economy and then have the resources to spend on things like defence.”
Hunt has published a 10 point plan in the event of a No Deal Brexit, in which a special No Deal Brexit Budget would be held in September, the first week parliament is back after the Summer Recess. The plan also includes a promise to cut corporation tax – from 19 per cent to 12.5 per cent – and to lower business rates for 90 per cent of firms. But the plan does not contain any reference to his earlier intentions to abolish National Insurance contributions (NICs) for the first £1,000 of earnings each month. Hunt’s office confirmed to the Daily Telegraph raising the National Insurance threshold is something the Foreign Secretary ‘would like to do’ if he becomes Tory leader, but he ‘hasn’t formally committed to it’, and it is not part of his No Deal Brexit plans.
Ahead of a hustings event in Perth, Hunt pledge a review of spirit duty to establish ‘the best path to economic growth and the most tax revenue’.
The leadership candidate has previously indicated an intention to increase the tax-free annual investment allowance from £1 million to £5 million.