Chancellor Rishi Sunak ‘SCRAPS plan to slash pension tax relief in next month’s Budget’ after backlash from Tory MPs
- The proposal to cut pension tax relief from 40 to 20 per cent had been mooted
- MPs have signalled they will not swallow such swingeing pension tax relief cuts
- David Davis branded the proposals an ‘economic farce’ and ‘moral disgrace’
The government will row back on plans to slash pension tax relief for higher earners amid fears of a backbench Tory rebellion.
Chancellor Rishi Sunak is understood to have backed down from wrapping the policy into next month’s budget after his own MPs lined up to condemn it.
The proposal to cut pension tax relief from 40 to 20 per cent was mooted as a £10billion-a-year revenue stream to help pay for Boris Johnson’s ‘leveling up’ agenda.
The Prime Minister has promised to pour funding into investment-starved areas in the North which backed the Conservatives at the election.
But MPs have signalled they will not swallow such swingeing tax relief cuts, which have been branded an ‘economic farce’.
Chancellor Rishi Sunak (pictured) is understood to have backed down from slashing pension tax relief for higher earners
David Davis, the former Brexit secretary who commands influence on the backbenches, today slammed the proposal a ‘moral disgrace’ (pictured on the Andrew Marr Show today)
The backlash has substantially spooked the Treasury to rip up the policy, according to the Times.
David Davis, the former Brexit secretary who commands influence on the backbenches, today slammed the proposal a ‘moral disgrace’.
He told the BBC’s Andrew Marr show: ‘Our tax burden at the moment, the total taxes… are at about their third highest since the war.
‘They’re incredibly high already, so we don’t want to be pushing it up. We certainly don’t want to put more taxes onto pensions…
‘Increasing them further would be a disgrace: a moral disgrace and an economic farce.’
Mr Sunak, who was parachuted into Number 11 following the departure of predecessor Sajid Javid, will finalise his Budget proposals this week.
The Prime Minister (pictured with his new Chancellor in Cabinet) has promised to pour funding into investment-starved areas in the North which backed the Conservatives at the election
He is believed to be considering hiking fuel duty to claw in an extra £4billion.
Yet this has also gone down badly with his backbenches, with Robert Halfon MP claiming it would hit the pockets of the blue-collar workers the party is trying to help.
The new 39-year-old Chancellor has already been forced to retreat from another flagship announcement he was due to put before the Commons on March 11.
A so-called mansion tax on expensive homes has been shelved following after Downing Street were reportedly spooked at the push-back from their MPs.
Rank-and-file party members, who typically favour tax-cutting policies, had also signalled their frustration.
Mr Sunak has confirmed the Budget has been penned in for March 11, ending speculation it could be delayed to afford him more time.
Despite Tory concerns, it is expected to sail through the Commons with the PM’s 80-seat majority.
The Treasury did not immediately respond to comment.