Hunt’s tax pledges may "cost up to £65 billion", says IFS
The Institute for Fiscal Studies estimates that Jeremy Hunt’s tax plans could ultimately cost between £37-£65 billion if he is successful in his bid to become prime minister.
Cutting corporation tax and raising the National Insurance threshold are among Hunt’s pledges, alongside raising the defence budget and reducing interest on student loans.
The IFS believe that Hunt’s plans would be unrealistic without needing to raise taxes or increase borrowing to ease the pressure on public spending.
In a statement, the think tank said that Hunt’s policies for more spending and less taxes would only “amplify the long-run challenges facing the UK’s public finances”.
However, the foreign secretary’s leadership campaign insist that the plans are aimed at “turbocharging the economy to attract inward investment and drive growth”.
Looking into Hunt's proposals, the IFS predicts his planned reduction of corporation tax down to 12.5 per cent may cost £13 billion per year.
Meanwhile, raising the National Insurance threshold is estimated to cost £3 billion for every increase of £1,000.
Hunt’s proposed rise on defence spending from two per cent of GDP to 2.5 per cent is forecast to cost a further £12 billion, while cutting interest on student debt would see a further £1 billion lost.
The IFS statement reads: “Mr Hunt’s combination of policy proposals would exacerbate pressures [on public spending] and widen a gap in the public finances that will ultimately need to be filled through some combination of higher borrowing, tax increases or cuts to other areas of spending”.
In response, Hunt’s campaign said: “By growing our economy we can afford to invest in our public services, support the lowest paid and ensure that Britain walks tall in the world again, all while ensuring that debt continues to fall”.
The IFS has also taken aim at Boris Johnson’s tax plan if he were to become leader, claiming it would mostly benefit the wealthy and may also cost “many billions”.