For all the anticipation about tax cuts and briefings on a possible inheritance tax scrappage, it looks like none of that’s coming anytime soon. Guido hears the Autumn Statement will be free of major retail measures on tax thanks to, as Hunt keeps reminding everyone, a distinct lack of “fiscal headroom“. Too bad that headroom keeps increasing…

Calls for tax cuts from businesses have been fended off by endless think tank warnings about their imaginary dire consequences. It looks like Hunt’s team have been spooked enough to listen. It is also rumoured that any major fiscal measures altogether are getting pushed back to the Spring Budget when Hunt’s hoping to unveil his “retail offer” for the election. Backbenchers are already restless, this won’t help…

Fresh calls for the Chancellor to cut taxes in his upcoming Autumn statement have resurfaced, as according to Resolution Foundation’s analysis of new economic data, Hunt’s so-called “fiscal headroom” is twice as much as it was back in Spring.  The amount of money the Treasury can spend whilst hitting the target of getting debt falling within five years was expected to be £6.5 billion. However, the new figure is estimated to be £13 billion. This means Hunt has more taxpayer money to spend on a levy cut between now and the next general election…

Tory MP David Jones called upon the Chancellor to take advantage of the new figures, saying: “The increasing headroom gives Jeremy Hunt the opportunity to realise his ambition to be a tax-cutting chancellor.” Now the Tories have a chance to actually stick to Conservative policies… 

Jeremy Hunt is continuing to fend off pressure to cut taxes at Tory Conference, claiming yesterday that they would “compromise” the fight against inflation. Left-wingers are known to argue that tax cuts are inflationary but the facts don’t bear out. Inflation is a monetary phenomenon.

When taxes are cut people will buy more goods and services at the already elevated prices. Meanwhile, wealthier families save the extra money to invest. Disposable income has not been shown to affect inflation. Even the £10 billion cost of living package had almost no effect.

Tax cuts that stimulate production, for example in corporation tax, will be anti-inflationary. As inflation is caused by a growing amount of money chasing a reducing amount of goods and services, then tax cuts that stimulate production will bring the level of inflation down by increasing supply. It’s basic economics… the main reason we don’t have tax cuts is because the government doesn’t want to cut spending.

The German coalition government has agreed to a massive corporation tax cut worth €32 billion over four years in a bid to revive its flagging economy, with Chancellor Olaf Scholz declaring yesterday that the package – part of the new “Growth Opportunities Law” – will provide the necessary “big boost” to get the country on a path to growth. When even a left-of-centre led coalition of Social Democrats, Greens and the liberal Free Democrats are coming up with a growth plan based on tax cuts it emphasises the anti-growth nature of Rishi’s corporate tax hikes.

Germany was forecast to be the worst-performing leading economy this year. So far, it has seen no growth in the three months to June, and shrank in the two previous quarters. After a few weeks of inter-party squabbling, the coalition has finally realised how to fix it. Hint: it wasn’t through more inflationary spending. Finance Minister Christian Lindner instead pushed for tax cuts to “improve Germany’s competitiveness” and “give new impulses for growth“. Is His Majesty’s Treasury paying attention?

New data from the Office for National Statistics shows the UK’s budget deficit between April and July was around £11.4 billion less than the Office for Budget Responsibility (OBR) forecast in March’s budget, with the actual figure at £56.6 billion. In July, tax receipts were £3.4 billion higher than twelve months ago. The Chancellor again has more headroom to slash taxes than the OBR gods foretold…

Commenting this morning, Hunt said:

“As inflation slows, it’s vital that we don’t alter our course and continue to act responsibly with the public finances.”

As Julian Jessop points out, borrowing and debt are both still higher than they should be – the way out is to go for growth. The election is about a year away; tax cuts are needed now to lift growth…

Liz Truss launched a scathing attack on Joe Biden last night while speaking at the Growth Forum hosted by the IEA. Appearing alongside former Australian Prime Minister Tony Abbott, Truss again waved the flag for her tax-cutting agenda, before slamming the US President for failing to tame inflation or make America more competitive. “How’s that going, Joe…”

“This agenda is not exactly fashionable at the moment. In fact we might say that the Overton window has shifted to the left across the western world… if we look at what’s happening in corporate board rooms, where there’s more chat about identity politics than there is about making a profit. If we look at what Joe Biden is doing in America, with state subsidies and the so-called inflation reduction act… how’s that going, Joe? If we look at that rather than making America more competitive, or the OECD [Organisation for Economic Co-operation and Development] which is trying to impose minimum tax rates on the free world…”

Back in April, while delivering this year’s Margaret Thatcher Freedom Lecture, Truss also attacked Biden for joining the “coordinated resistance” against her agenda. None of this is much of a surprise, given Biden waded in to brand Truss’s tax cuts “a mistake” last October. Looks like they’re off each other’s Christmas card lists…