Only one tax cut can save Rishi Sunak now

2 August 2022

3:00 PM

2 August 2022

3:00 PM

Rishi Sunak’s promises on tax are lacklustre. He’s announced a fiddly one-off tax break on energy that will last for just a year which hardly anyone will notice due to inflation. There’s also income tax cuts up to seven years in the future, even though he is hardly likely to be Prime Minister by then (and he seldom keeps any promises on taxation for more than a few hours anyway).

Sunak’s promises and u-turns on taxes are making him look inconsistent at best, and a cynical opportunist at worst. The Tory members are right to regard his words with suspicion. But there is one tax cut that could still win the membership over: abolishing inheritance tax.

Inheritance tax is such an obvious target for abolition that it’s astonishing that none of the Tory leadership candidates have seized on it yet.

The levy is incredibly unpopular with the largely elderly property-owners that make up the bulk of the Conservative party membership, most of whom spend far more time than they would like to working out clever wheezes for passing on their homes to their families without having to hand over 40 per cent of their worth to HMRC.

Inheritance tax is also hitting more and more people. The number of estates paying it, driven by rising property prices, rose by another 14 per cent last year, and keeps on rising. Far from being a tax on the super-rich, it is hitting ordinary middle-class families. So it is perfectly plausible to make a case for reform that doesn’t just look like cynical vote-grabbing (even if it is).

Finally, it is not even terribly expensive. The total amount raised is only a relatively modest £6.1 billion annually. Measured by votes won per billion in tax giveaways, a key metric for this campaign, it is unbeatable value for money. It is hard to see the former banker in Sunak not appreciating that.

Promising to abolish inheritance tax worked for George Osborne back in 2008 when he was shadow chancellor. It can surely work its magic again.

In reality, Sunak is probably doomed at this stage. He has too much ground to make up, and nothing he says sounds very convincing. But if he wanted a bold move that would at least get himself back in the game, only abolishing inheritance tax will work.

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