If we are to have tax cuts, the PM must choose wisely

Editorial: Ahead of a general election, and buoyed by the recent drop in the inflation rate, the Conservative government is set for a ‘gear shift’ that will cut taxes. A reduction in income tax would be generally welcome – but slashing inheritance tax, which is widely seen as unfair yet affects just 4 per cent of estates, would be a wrong move made for the wrong reasons

The prime minister Rishi Sunak and his chancellor Jeremy Hunt seem attracted by the idea of reducing inheritance tax (AFP/Getty)

As an important political year looms, Jeremy Hunt’s announcement that his Budget will take place on 6 March has prompted a flurry of speculation he will cut taxes in what is likely to be the last major fiscal event before the general election.

Rishi Sunak, who has promised a “gear shift” to tax reductions now that inflation has been halved, will not be too unhappy if his fractious backbenchers get the message that tax cuts are on the way. There is strong support across the Conservative Party for tax cuts, which are seen as a necessary, if not sufficient, ingredient of an improbable election victory.

The prime minister and his chancellor seem attracted by the idea of reducing inheritance tax. Although paid by only 4 per cent of estates, the tax is unpopular and seen as unfair among people who are unlikely to ever pay it. Many Tories view it as a “tax on aspiration”, arguing that people should be able to pass on income on which they have already been taxed to their children.