Personal tax cuts plan in ‘investment zones’
Personal taxes may be cut for those living in new “investment zones” which may be announced by Chancellor Kwasi Kwarteng.
The zones would represent an extension to the freeport initiative and form part of a package of measures to boost economic growth.
New Prime Minister Liz Truss and Mr Kwarteng have pledged to reduce the tax burden and slashing personal taxes in addition to business levies are seen as key to tackling the soaring cost of living.
The focus of Mr Kwarteng’s statement on Friday will be a £30 billion promise to reverse the national insurance rise, cancel the scheduled increase in corporation tax, and scrap green levies on energy bills. It is thought any cuts to income tax may have to await a formal Budget in November.
On Wednesday, Business Secretary Jacob Rees-Mogg is expected to provide details of the Government’s plans to help firms through the energy crisis. However, a cap on the amount suppliers can charge businesses, with the difference funded by government subsidy, will require primary legislation.
Proposed “investment zones”, which Ms Truss has described as “full fat freeports”, were part of her campaign for the Tory leadership. These zones would also benefit from relaxed planning restrictions and fewer regulations.
As many as 12 “investment zones” could feature in his mini-budget, or “fiscal event”, to be announced on Friday. The West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk have been mentioned as potential locations.
There has been no word about a zone in Scotland, though the talk of watering down environmental protection may ring alarm bells at Holyrood which insisted on tougher conditions for two green freeports.
A decision on which locations will be chosen is imminent, with strong lobbying coming the north east around Aberdeen as well as the Port of Cromarty.
Economists and analysts have raised concern about how the government intends to pay for its subsidised energy plans while cutting taxes, particularly with the sharp fall in the pound which will raise the cost of borrowing.