Fears Truss plans will face attempts to be BLOCKED by ‘hostile’ anti-tax cut Establishment

Liz Truss is 'avoiding transparency' with tax plans says Stride

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Sir John Redwood accused the UK’s economic watchdog of being “hostile” to tax cuts planned by the Foreign Secretary. The veteran MP, who is tipped for a prominent role in a Ms Truss Government, accused the Office for Budget Responsibility (OBR) of ignoring basic economics which supported Ms Truss’s plans for Government.

And he blasted the body for repeatedly producing “massive” over-forecasts of the UK deficit, which he argued has led to increased pressure for tax rises.

Writing on his website, Sir John said: “One of the features of the OBR/Treasury model that works badly is the ability to forecast the all important public sector deficit or amount that the state needs to borrow each year.

“This is all important as the forecast drives tax policy.

“Whenever the model forecasts a high or rising deficit the cry goes up to increase taxes.”

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Adding that there was “an inbuilt hostility to any laffer effect” – an economic modelling – he said: “Cutting Stamp duty to stimulate transactions recovering from Covid for example was scored as cutting revenue but the overall boost to taxable activity was positive and Stamp duty itself overall rose.”

His attack on the OBR comes as Ms Truss is thought to be considering introducing emergency tax measures without asking for input from the body.

OBR forecasts can take up to 10 weeks to be planned but the Tory leadership frontrunner wants to introduce tax cut measures to help with the cost of living within days of being in No10.

A spokesman for Ms Truss’s campaign said yesterday: “‘A Truss government would seek to act as soon as possible to help people across the UK, by cutting taxes and introducing a temporary moratorium on energy levies.”

An OBR spokesman said: “We would be prepared to publish a forecast for the new chancellor, should they request it.”

Ms Truss has already admitted that she faces a battle with the Treasury in the future, saying many of her plans counter Treasury “orthodoxy”.

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“The Treasury has fantastic, very very clever people working but there is definitely an orthodoxy and there is a focus on what I describe as abacus economics of making sure that tax and spend add up but not focusing enough on economic growth,” she told the FT earlier this month.

“I am somebody who is prepared to take on that orthodoxy, sometimes the risk aversion, which I think is also an issue.

“I think there is excessive risk aversion in parts of Whitehall to be able to get things done.”

Rishi Sunak has warned Ms Truss’s economic plans risk pouring “fuel on the fire” and worsening inflation.

Speaking to broadcasters, he said he understood tax cuts “may sound attractive at first, but if they risk stoking inflation and actually do nothing to help poorer people and pensioners, then they actually are going to be bad for everyone”.

“I think people know if something sounds too good to be true, it probably is,” he added.

“I don’t want to put fuel on the fire.

“I don’t think that is the right approach.”

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