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As the voting process for the new Conservative Party leader formally opened with postal ballots being mailed out to Tory members from Monday, Rishi Sunak vowed to cut the basic rate of income tax by 20 per cent in a few years if he is elected Britain's prime minister.
The 42-year-old former Chancellor, who is trailing his rival Liz Truss in the opinion polls and bookmaker's odds, said his "radical vision" would mean a 20 per cent tax reduction -- the "largest cut to income tax in 30 years".
Tax cuts have become the dominant issue in the election campaign and while Truss has pledged cuts from day one, Sunak has sought to focus on a more measured approach in order to curb soaring inflation.
"What I'm putting to people today is a vision to deliver the biggest income tax cut since (former Tory prime minister) Margaret Thatcher's government," said Sunak.
"It is a radical vision but it is also a realistic one and there are some core principles that I'm simply not prepared to compromise on, whatever the prize,” he said.
Under the proposals, Sunak said he would build on his previously announced 1p cut to income tax in April 2024. A further 3p off by the end of the next Parliament, around 2029, will be paid for through economic growth.
Sounding a warning note and an indirect attack at his rival's tax pledges, the British Indian former minister added: ”Firstly, I will never get taxes down in a way that just puts inflation up. Secondly, I will never make promises I can't pay for. And thirdly, I will always be honest about the challenges we face.
"Because winning this leadership contest without levelling with people about what lies ahead would not only be dishonest -- it would be an act of self-sabotage that condemns our party to defeat at the next general election and consigns us to a long period in Opposition.”
His campaign team said the number one priority for Sunak, if elected Tory leader and British prime minister on September 5, will be to tackle inflation and he has the ”right plan” to do that by getting borrowing under control and implementing supply side reform in order to improve productivity. Once inflation has been beaten, Sunak's tax vision is set to prioritise putting money back in the pockets of hard-working families to reward work.
"There is no more serious choice than the one now facing Conservative members: to decide the person who leads our country at home and abroad during difficult times. As they turn to that decision I would urge them to treat with caution any vision that doesn't involve any difficult trade-offs and remember that if something sounds good to be true -- then it probably is,” he said.
The 1p cut to income tax announced earlier this year is said to be fully costed and paid for and will be introduced in April 2024. Each subsequent penny off income tax will cost around GBP 6 billion a year, which is said to be ”affordable” whilst still keeping the debt-GDP ratio falling.
The Sunak campaign team said his income tax vision sits alongside his plan to reform corporate taxation and he proposes to reform capital allowances, a special form of tax reduction that is only available to those companies actually making investments, to encourage much needed investment and boost growth.
His opponent's campaign accused the former chancellor of a ”U-turn” on the issue of taxes and said that people cannot wait that long for tax cuts. It came as another senior Cabinet minister and former candidate, Nadhim Zahawi --who replaced Sunak as chancellor, endorsed Liz Truss in the leadership race.
"We are in a national economic emergency, and we need more than words. We need delivery, and Liz will be the delivery prime minister," he said.
Nine Tory members of the Scottish parliament also endorsed Truss, highlighting her own childhood in Scotland.
Meanwhile, the second election hustings to convince Tory voters is scheduled for Exeter in south-west England later on Monday. The deadline for postal ballots to be returned and online votes to be registered is the evening of September 2, with the result to be declared on September 5.