Boris Johnson has promised to cut income tax for those earning more than £50,000 if he wins the Tory leadership race.
Johnson said he would cut taxes for around 3m people by raising the 40p threshold from £50,000 to £80,000 if he becomes prime minister.
“We should be raising thresholds of income tax – so that we help the huge numbers that have been captured in the higher rate by fiscal drag,” he wrote in his Telegraph column.
The tax cut would cost nearly £10bn a year which he said would be funded partially from the £26bn put aside by the Treasury as a no-deal Brexit fund.
Tom Selby, senior analyst at AJ Bell, said : “This leadership race was always going to see some pretty naked electioneering aimed squarely at core Conservative voters. None of us should be surprised that bookies’ favourite to be next Prime Minister Boris Johnson is among the first to strip off. “The most obvious impact of this move would be to drastically reduce income tax bills for those earning between £50,000 and £80,000 – although this would in part be tempered by higher National Insurance Contributions.
Higher-rate taxpayers who are above state pension age and thus don’t have to pay NICs at all would likely be the biggest winners from the policy. “Retirement savings incentives would also be affected, with tax relief on contributions for those earning between £50,000 and £80,000 dropping from 40 per cent currently to 20 per cent. Of course the combination of matched contributions from their employer, NICs relief and tax-free investment growth over time mean there would still be every reason for this group of people to save in a pension.”
Yesterday Johnson threatened to withhold £39bn the UK has agreed to pay the European Union, to use as a bargaining chip, raising eyebrows in the City and sparking anger across the channel.
Work and pensions secretary Amber Rudd this morning criticised Johnson, Dominic Raab and Esther McVey who have all pledged to take the UK out of the EU on 31 October, with or without a deal.
“Members of parliament will find a way to stop no deal and I think that any aspiring leader needs to factor that in,” she told the BBC. “I think there could be an election – parliament is a very creative place, and with the assistance of an activist Speaker there will be a way that MPs will find in order to have their voice heard.”
Hunt and former Brexit secretary Raab have also said they will cut taxes if they win power. Hunt said he would slash corporation tax from 19.5 per cent 12.5 per cent, while Raab said he would cut the basic rate of income tax from 20p to 15p over five years.
The deadline for Conservative MPs to enter the race to succeed Theresa May is 5pm today. Candidates must have the backing of at least eight MPs to enter the race. Health secretary Matt Hancock, environment secretary Michael Gove, Hunt and Raab are all officially launching their leadership campaigns today.
Gove has faced calls to pull out of the race, after he admitted taking cocaine before entering politics, preempting revelations in a forthcoming book by City A.M.’s head of politics Owen Bennett.