Liz Truss announces tax reform plan so system is 'fairer for families and stay-at-home carers'

Foreign Secretary Liz Truss has pledged to conduct an immediate review into treating households as single tax entities

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Liz Truss has vowed to conduct an immediate review into the taxation of families to ensure people aren’t penalised for taking time out of work to care for family or their children.

Making the announcement on Thursday, her campaign pointed to an estimated £1trillion worth of behind-the-scenes caring contributions, which lessen the burden on the public purse.

Ms Truss wants to implement the reform through an opt-in in next year's Budget, to reflect models used in Germany and the US.

She said: "Hardworking families are the bedrock of a stable society, and one of my top priorities as Prime Minister would be easing the tax burden on families.

Foreign Secretary Liz Truss is running for the Conservative Party leadership
Foreign Secretary Liz Truss is running for the Conservative Party leadership
Former Chancellor Rishi Sunak
Former Chancellor Rishi Sunak

"They don’t just look after themselves but also build communities, charities and even businesses.

"I want to make sure that our tax system works for them. We will review the taxation of families to ensure people aren’t penalised for taking time out to care for their children or elderly relatives."

Ms Truss's main leadership rival, Rishi Sunak, is taking a very different position on taxation and the economy.

It looks increasingly likely he will not cut personal taxes until at least autumn 2023 to avoid fuelling inflation, as fiscal policy looks to be the key difference between the two leadership candidates.

Ms Truss is the favourite in the race for No.10 as it is widely understood she enjoys more support from the party membership.

The two will now take part in a series of hustings across the country, with the 200,000-strong party membership choosing their preferred candidate over the summer.

The winner is expected to be confirmed on September 5.

Despite being the early favourite, Ms Truss has been warned against underestimating Mr Sunak's "superior charisma, charm and campaigning skills".

Matthew Engel, political betting expert and commentator for the Racing Post said: “Overnight trading shows Liz Truss is still the hot betting favourite to beat Rishi Sunak as leader of the Conservative Party after the final MPs ballot, at a best price of 4/6 on with major bookmakers – odds many experienced punters would regard as prohibitive.

"Mr Sunak could be backed at 6/4 against on the betting exchanges.

Boris Johnson's tenure as Prime Minister is coming to an end
Boris Johnson's tenure as Prime Minister is coming to an end

“This seems to be based on very flimsy early polling evidence of Conservative Party members.

“It ignores Mr Sunak’s superior charisma, charm and campaigning skills which are likely to come into play over the next few weeks.

“MPs in the Penny Mordaunt camp are also bitter against Ms Truss, who finished only eight votes clear of their candidate.

“One person is really going to cheer for Ms Truss all right: Sir Keir Starmer, and some of the party members might want to reflect on that. Labour think Ms Truss will find it very hard to win a general election.”

Ms Truss became favourite in the betting on Tuesday, the fourth person to hold that position in two weeks, after Ben Wallace, who declined to stand, Mr Sunak and Ms Mordaunt.