Reducing UK Taxes Now Would be a Mistake, Says IMF

Several Conservative party leadership candidates have promised tax cuts, but a top IMF official has warned that it may be better to raise them instead. "I think debt-financed tax cuts would be a mistake at this point," Mark Flanagan, who leads the Fund's UK team, told a News agency.

The leadership contest has reignited the heated debate over tax cuts. The call to address the rising cost of living is becoming louder. While former Chancellor Rishi Sunak has argued against tax cuts, other candidates have made promises such as reductions in the basic rate of income tax and further reductions in fuel duty.

Tax breaks could provide some relief to households dealing with the steepest increase in food and energy bills in decades.
The IMF is among those predicting that the UK will have the slowest growth and the most painful inflation of any G7 country in 2023, owing in part to its reliance on fossil fuels, a major driver of inflation.

Mr. Flanagan, on the other hand, believes that tax cuts may be misguided and may even increase inflation by increasing spending. He contended that tax revenue could instead be used to invest in the country's long-term future.