TAX cuts risk worsening Britain’s economic crisis by tearing an even bigger hole in the public purse, Liz Truss and Rishi Sunak are warned today.
Both Tory leadership contenders have promised to slash taxes in their bid to be the next PM but are not publicly pledging to dramatically rein in government spending.
But in a report from the Institute for Fiscal Studies, deputy director Carl Emmerson said double-digit inflation will force whoever becomes PM to stump up more cash for benefits, pensions and paying off debt.
Permanent tax cuts would likely plunge the coffers deeper into the red without a huge spending squeeze.
Mr Emmerson said of the situation: “It is hard to square the promises that both Ms Truss and Mr Sunak are making to cut taxes over the medium-term with the absence of any specific measures to cut public spending and a presumed desire to manage the nation’s finances responsibly.”
The gloomy report warns that the increased tax revenue caused by inflation will be gobbled up by a left-right punch of weak economic growth and higher government spending.
And that while borrowing in the short term to give support to struggling families would be harmless – doing it in the long run would rack up enormous debt.
Team Rishi insisted the report “drives a coach and horses through Liz’s economic plan” for bumper tax cuts and insisted it supports Mr Sunak’s plan for targeted cash help.
Ms Truss’ campaign insisted that her “economic plan is consistent with a sensible fiscal position”.
At the latest hustings in Belfast yesterday, the rivals once again traded blows in person on their plans to ease the cost of living pain.