LONDON (Reuters) -British finance minister Nadhim Zahawi said on Monday he would abolish a planned increased in corporation tax and would cut the basic rate of income tax by reducing government spending if he is chosen to replace Boris Johnson as prime minister.
Zahawi, one of 11 candidates so far to declare they are running for the leadership, also told a campaign event that tax as a percentage of GDP would fall year-on-year if he became prime minister.
Speaking at an event at the Churchill War Rooms in London, Zahawi announced plans to cut the base rate of income tax to 19% next year and 18% in 2024 if he is elected. The current basic income tax rates starts at 20% for people earning 12,571 pounds ($14,948.18).
Zahawi said his proposed cuts to income tax would save the average household about 900 pounds a year.
"The cost-of-living crisis is a national economic emergency, and it has been made worse, far worse by taxing hardworking families even harder," he said.
"People need to keep more of their money and let them choose, of course, how to spend it."
Zahawi was appointed finance minister in the political turmoil of last week when more than 50 people resigned from government in protest at Johnson's handling of scandals.
Earlier, Zahawi said he would fund tax cuts by forcing every government department from defence to education to cut running costs by 20%.
Torsten Bell, the chief executive of the Resolution Foundation think tank focused on living standards, said taking an extra 1 pence off income tax would cost the government about 6 billion pounds a year.
The Conservative leadership contest is already centering on who is prepared to offer the most aggressive tax cuts in an appeal to the grassroots of the party who ultimately pick the winner.
($1 = 0.8410 pounds)