Truss tax cuts: Wonk warning on hit to public finances

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Liz Truss' tax cuts have come under fire from the IFS
Liz Truss' tax cuts have come under fire from the IFS

LIZ TRUSS’ planned tax cuts would “completely crash the public finances,” warned the boss of one of the UK’s foremost economic think-tanks, the Institute of Fiscal Studies.

Prospective new Prime Minister Liz Truss is expected to announce an emergency budget early on in her administration if she, as expected, is made leader of the Tory party next week.

But Institute of Fiscal Studies’ (IFS) director Paul Johnson said Truss had adopted a “simplistic” mantra that cutting taxes would grow the economy in an interview with The Times.

Truss allies have argued that a failed ‘economic orthodoxy’ needs to be changed to deliver economic growth.

Many expect her supporter Kwasi Kwarteng, currently the business secretary, to take the job of Chancellor and announce a series of tax cuts early on in her premiership.

The current foreign secretary is expected to reverse planned increases to corporation tax as well as reversing the rise in national insurance brought in earlier this year in order to help Brits with the rising cost of living.

The IFS’ Johnson also warned the tax cuts could be inflationary. Truss’ rival Sunak said they would do little for lower earners.

A Treasury spokesman told the Press Association department is making the “necessary preparations” to ensure the next government has options to deliver extra help “as quickly as possible”.