Rishi SunakImage: Simon Dawson / No 10 Downing Street

As the eagerly anticipated March 6 Budget approaches, The Treasury’s confirmation has intensified expectations surrounding tax cuts as a focal point. However, brewing reports suggest that Chancellor Rishi Sunak is leaning towards allocating limited resources to eliminate the Inheritance Tax, sparking concerns among some Tory MPs who argue that this may not be the most pressing economic issue at hand.

Former deputy to Rishi Sunak at the Treasury and Levelling Up Secretary under Liz Truss, Sir Simon Clarke, acknowledges the unpopularity of the Inheritance Tax. However, he contends that the primary focus of the upcoming budget should be on alleviating the cost of living. Clarke emphasizes the importance of cutting income tax, viewing it as a conservative approach that directly boosts household finances and encourages a preference for work over welfare.

Speculation about the budget’s content has included the possibility of income tax cuts, a pledge Sunak made during the Tory leadership race against Liz Truss. Nevertheless, Sunak has linked income tax cuts to lowering inflation, a condition that the Bank of England suggests may not occur in the coming months.

Neil O’Brien, a former minister, echoes the sentiment that priority should be given to tax cuts affecting low to middle-earners. Referencing IPSOS Mori polling, which shows that 44 percent of voters favor cuts to income tax on earnings between £12,570 and £50,000, O’Brien suggests alternatives. These include raising the personal allowance, lowering the 20 percent tax rate, or increasing the threshold for the 40 percent rate.

O’Brien’s proposal aligns with public preferences, with 34 percent supporting cutting council tax and 26 percent favoring reducing VAT. Inheritance Tax ranks low, with just 14 percent of voters prioritizing it, falling behind National Insurance and Fuel Duty.

In his mini-manifesto, O’Brien outlines allocating £3.5 billion to pay social care workers more, hiring more GPs, cutting taxes for those at the lower end to ease the cost of living, and implementing tax cuts to boost productivity, such as capital allowances.

Adding to the debate, Red Wall MP Jonathan Gullis from Stoke-on-Trent North joins his colleagues in cautioning against immediate Inheritance Tax cuts. Instead, he advocates prioritizing raising the higher rate of income tax, cutting the basic rate, scrapping IR35 reforms, and increasing the VAT registration threshold.

As tension builds within the Tory ranks, the upcoming budget appears poised for debate and deliberation, with differing opinions on the most effective path to address economic challenges and appease the electorate.

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