Tax cuts have dominated the Conservative leadership contest, with many promising cuts for individuals (on income tax, fuel and National Insurance Contributions), businesses (via corporation tax) or both. The reasoning is that allowing people and companies to keep more of their income will stimulate spending, which can, in theory, help to boost the economy. Some economists also believe that reducing tax can increase worker productivity, again adding economic value.
Such promises could also come at a cost, however – according to the Institute for Fiscal Studies (IFS), reversing the 1.25 per cent National Insurance increase would cost £13bn per year, while reducing corporation tax to 15 per cent (as was promised by Jeremy Hunt and Sajid Javid before their leadership bids failed) would cost £31bn a year.
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