In a reluctant exchange of views with MPs in the House Finance Committee, the chancellor said he had to make choices about where to prioritize support because of rising government borrowing costs as the British economy is hit by rising inflation. from the Russian war in Ukraine. “One can say that if they do not like my choices, they will be happy to borrow a lot more. “This is not something I think is responsible or logical,” he said. “Do you think people are stupid?”: MP disputes Sunak over income tax cut plan – video The chancellor was attacked as a “fiscal illusion” because he promised some tax cuts while raising the overall tax burden and not helping the poorest in society. Labor MP Siobhain McDonagh asked: “Why did you prioritize your ambition to have the reputation of being a tax collector rather than helping people who are really worried about heating their homes or feeding their children?” Sunak said it was not possible to completely isolate every household in Britain from high levels of inflation and insisted that his spring statement and the previous 9 9bn bailout package were “progressive”, with measures to help the poorest in society. . The chancellor was sharply criticized for not raising the value of universal credit benefits more than the planned 3.1% interest rate from April, despite forecasts for inflation to rise to 8% in the same month. However, he said there were sufficient alternatives – including funding for hardships available through local councils and support to help the unemployed work. “I think people may have wanted to do more for welfare, less to reduce employee taxes. Other people may have chosen to borrow a lot more, [but] “These are not the options I would be comfortable with,” he said. Faced with angry questions from Labor MPs on the committee, Sunak admitted he would not be a “chancellor with tax cuts” despite plans to raise the national insurance contribution limit and promise to cut income tax in the future. . After being photographed filling a car with petrol that was not his after his spring statement, the chancellor admitted that he drove a Volkswagen Golf and not the Kia Rio, which belonged to a Sainsbury’s employee and borrowed for the photography. McDonagh suggested to Sunak that he assumed voters were stupid if he did not realize they would see the 2024 tax cut as a transparent electoral ploy. However, the chancellor said he wanted to give people a sense of “travel direction” for tax cuts in the future. Sunak argued that higher UK debt rates or higher-than-expected inflation would be costly for the Treasury, as it would force the country to pay more for its debt service costs. He said Britain was already projected to borrow 60% more than the average from World War II next year. “[Higher borrowing] is in danger of triggering inflationary pressures and I do not think it is the right thing for the country in the long run. I think we need to be responsible for lending, I think we need to reduce debt and borrow under control. That fact must be taken into account. “ Despite warnings of increased risks to public finances, Sunak has come under fire for pledging to cut the key income tax rate from 20% to 19% in two years at a cost of 6 6bn to the public – a development with consequences for the size of the wriggle room left by the chancellor in public finances. Forecasts by the Office of Budget Responsibility show that the chancellor has about 30 30 billion left in the public finance targets he has imposed following the measures of his spring statement. He said last week that the government has a 66% chance of achieving the goal, based on historical data. Earlier, OBR chief Richard Hughes told lawmakers that the chancellor’s reliance on discounts through the tax system had reduced the effect of supporting the poorest in society. Hughes said: “The chancellor has used a combination of the council’s tax systems, supporting the energy bills and the tax system, to provide support and relief to people facing this cost-of-living problem, rather than the benefits system. “One of the limitations of this is that you are limited by how many people you can reach through the tax system. “If people do not work or work the number of hours it takes for personal benefits and thresholds to be exceeded, it is more difficult to access them through the tax system than through something like universal credit, which reaches people. Lower the income scale. ».
