Tax ‘gamble’ divides opinion

Kwasi Kwarteng’s strategy of sweeping tax cuts has been labelled reckless by some MPs and commentators, while others have praised it as a bold and necessary move. Paul Johnson, the director of the Institute for Fiscal Studies, said: “The Chancellor announced the biggest package of tax cuts in 50 years without even a semblance of an effort to make the public finance numbers add up. Instead, the plan seems to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable rising path and hope that we get better growth.” However, the National Institute of Economic and Social Research said the measures would stop the economic downturn. “The announced government support measures will shorten the length of this recession,” it said, predicting that growth would return in the final months of this year. Elsewhere, Policy Chairman at the City of London Corporation Chris Hayward welcomed the move to freeze the corporation tax rate at 19%, saying it “will help businesses unlock investment.” Mehreen Khan in the Times says “Kwarteng’s gamble is that his tax cuts deliver an immediate shot in the arm to consumers and businesses alike,” while the BBC’s Faisal Islam says “the echoes of the last Budget of this size in 1972, which led to an infamous period of boom and bust under chancellor Anthony Barber, will not be comfortable.”

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