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Liz Truss vowed to axe the planned corporation tax hike from 19 to 25% next year as she made a multibillion-pound pitch for the Tory leadership during an online hustings.
The Foreign Secretary also used the digital debate on Friday to commit to a temporary moratorium on the green energy levy, costing around £5 billion per year.
The commitments during the hustings held over Zoom were the latest in a campaign for No 10 that has seen some candidates criticised for lavish and uncosted taxation pledges.
In the event hosted by the Conservative Home website, Ms Truss said she would take immediate action to start “putting money back into people’s pockets” during the cost of living crisis.
Ms Truss, who is being backed by Boris Johnson’s most loyal allies, said she would reverse the national insurance hike, which she said she opposed in Cabinet.
“I think it’s even more of a mistake now when we’re facing such strong economic headwinds,” she added.
“I would also have a temporary moratorium on the green energy levy to cut £153 from people’s energy bills.
“And I would also not do the corporation tax hikes because I think it’s vitally important that we’re attracting investment into our country.”
The corporation tax hike from April next year is forecast to bring in more than £16 billion annual from 2024/25.
Her campaign team has been asked how she would pay for the commitments.
Former chancellor Rishi Sunak, who the right of the party is rounding on because of his high spending and high taxation approach throughout the pandemic, argued he would only enact tax cuts when inflation is under control.
“The most impressing economic challenge we are facing is inflation – inflation is the enemy that makes everybody poorer and it must be the Government’s priority to get a grip of it,” he said.
“I’m not going to do anything that puts that at risk, so I will deliver tax cuts but I will do so responsibly after we’ve got a grip of inflation.”
Penny Mordaunt, who is widely seen as the third frontrunner joining Ms Truss and Mr Sunak as favourites, said she was making few commitments on tax because “this contest is not the right place to do it”.
“I’m not going to set out plans for corporation tax or any other of those taxes until we have a proper fiscal event,” the trade minister said.
Ms Mordaunt also pleaded for a “positive contest”, saying “I don’t want mudslinging”, as she bears the brunt of the attacks from rival camps.
The Zoom debate was the first public hustings in the leadership contest.
It was at times disrupted by the usual online difficulties, with Ms Truss struggling to unmute herself at one point and suffering from a dodgy internet connection, as did Kemi Badenoch.
Mr Sunak’s backdrop told members to join his “campiaign” in a spelling blunder.
The candidates were also all asked their “greatest weakness”.
Ms Badenoch said hers was “allowing my sense of humour to look like I’m flippant about issues”, while Mr Sunak essentially said he strives too hard for perfection.
Ms Truss said she has in the past been “excessively over-enthusiastic and sometimes I have to rein myself in”.
Tom Tugendhat, who has made his military background a central pillar of his campaign, said: “I know this is going to surprise you but I may talk about the Army a little too much, which is possibly a weakness.”
Ms Mordaunt said: “I was tempted to say Burmese cats, as I have four and introducing them into No 10 might present some challenges with Larry.”