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Tory One Nation group calls on chancellor to cut taxes for workers in budget

Jeremy Hunt has been urged to prioritise cutting direct taxes for working people instead of scrapping inheritance tax that benefits “the most wealthy” in his budget next month.

The One Nation group of Conservatives MP has warned the chancellor he risks putting Labour into power at the next election unless he addresses “everyday challenges” around the cost of living, childcare and high taxes.

The group, represented by MPs on the moderate wing of the party, has issued eight policy recommendations they want Mr Hunt to implement at the budget, which takes places on 6 March.

They include a multi-year settlement for childcare funding, a commitment to average interest rates for graduates paying back student loans, reforms to stamp duty to incentivise local councils to build more houses, and a levy on foreign owners of vacant luxury flats that are purchased for investment purposes.

The One Nation group has also urged the chancellor to allow first time buyers to put up to 25% of their tax free pension savings into the deposit for their first-time home, and has called for income to be taxed at the same rate, regardless of the source – whether that be earnings, benefits, or dividends.

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Damian Green, chair of the One Nation caucus of Tory MPs, said “the best way” to grow the economy was by “cutting taxes and giving people the opportunity to buy their own homes and invest in their future”.

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“The public recognises this, and in turn has always trusted our party to focus on sound money and delivery, rather than prioritising tax cuts that only benefit the most wealthy, such as the inheritance tax,” he said.

“The chancellor must seize the opportunity he has at the budget to cut taxes, drive growth and put more money back into hardworking, ordinary people’s pockets.

“This is our chance to demonstrate to voters that we are on their side and that we are taking steps to alleviate pressures they face in all aspects of everyday lives.

“If we fail to do so, we risk the damaging consequences of a Labour government.”

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‘We’ll only cut taxes in a responsible way’

Mr Hunt has recently rowed back on promises of big tax cuts in the budget, saying at the end of last month that he was unlikely to have the fiscal “room” he had in the autumn, when he cut national insurance by two percentage points from 12% to 10%.

Towards the end of last year there were briefings in the newspapers that Rishi Sunak could cut inheritance tax which is paid by around 4% of the population – but Downing Street dismissed the report as “speculation” and refused to comment further.

At present it is charged at 40% and applies to estates worth more than £325,000, but there are allowances that can mean it’s only paid on more valuable estates.

While proponents of the tax say it is important for social mobility, critics deride it as a “death tax” because it applies to earnings that have already been taxed.

It has also been reported that any tax cuts Mr Hunt does consider could come at the expense of cutting public spending.

But in a major intervention, the International Monetary Fund (IMF) said last month that Mr Hunt should not be planning to cut taxes.

The economic body said measures such as preserving high-quality public services and undertaking “critical” investments to boost growth required higher spending than was currently reflected in the government’s budget plans.

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The changes to stamp duty suggested by the One Nation group would mean that if a local authority hits 100% of its housing targets, it will receive as funding 15% of the stamp duty from the corresponding house sales – rising to 25% if the authority exceeds 125% of its targets.

In 2022 Mr Gove was criticised for watering down mandatory housing targets following the threat of a revolt from Tory MPs.

Data from July to September last year showed housing applications are down 12% – prompting former housing secretary Brandon Lewis to warn the Tories risked losing a “generation of voters”.

A Treasury spokesperson said: “We are rolling out the single largest expansion in childcare in England’s history, ensuring working parents receive 30 hours of free childcare a week, and we increased child benefit by 10.1% last year and a further 6.7% this year.

“This year’s cut to National Insurance saves the average earner £450 per year. We will not speculate on whether further tax cuts will be affordable in the upcoming budget, however our tax burden remains lower than any major European economy and inflation has more than halved.”

Sky News Source