UK's Sunak makes low-tax pitch as leadership question looms

[LONDON] Chancellor of the Exchequer Rishi Sunak laid out a vision to cut taxes in the UK, establishing his credentials as a Thatcherite who can appeal to the members of his Conservative Party who are questioning Prime Minister Boris Johnson's leadership following a succession of scandals.

"I firmly believe in lower taxes", Sunak said at the annual Mais lecture at the Bayes Business School in London, an event used by past chancellors to signal their economic plans and discuss their politics.

Sunak said his priority is to cut taxes on business investment, and also that Britons should be "able to make decisions about how to save, invest or use the money we earn".

Sunak's stance is designed to appeal to the party faithful amid increasing displeasure from rank-and-file Conservatives at his record on tax so far.

He's put Britain on course to its highest tax burden since the 1950s, including a new 1.25 per cent payroll tax that will start in April to pay for health and social care.

But Sunak also took a swipe at some of his Tory critics, dismissing "the flippant claim that 'tax cuts always pay for themselves'".

Instead he pledged to cut taxes in a "responsible way". He drew parallels between his philosophy and the approach taken by 1980s Prime Minister Margaret Thatcher and her chancellor, Nigel Lawson, who he described as "sound lodestars to navigate by".

Sunak has come under increasing scrutiny since a succession of scandals hit Johnson, including a police investigation into alleged pandemic rule-breaking parties in Downing Street.

More than a dozen Tory members of Parliament have said they've lost confidence in him and others are reserving judgment until the police reach their conclusions.

While the crisis over Ukraine overshadowed Sunak's speech and provided Johnson with respite from calls to depose him, the conclusion of the so-called partygate probe and local elections in May may yet trigger efforts to topple the leader.

The chancellor is the bookmaker's favourite to succeed Johnson should his MPs push him out of office. His record on tax is a liability, especially with a growing cost-of-living crisis crisis where energy prices and inflation are squeezing consumer finances.

2 years after the coronavirus pandemic took hold, Sunak also is trying to rein in a record debt burden. In his lecture, Sunak said the UK needs a "new culture of enterprise" organised around "free market principles". BLOOMBERG