If elected prime minister, Liz Truss would seek to immediately reverse the increase in National Insurance contributions.
Her team stated that it was previously believed the plan could not be implemented until April 2023, but they now believe it will be implemented within weeks.
But her rival for the Tory leadership, Rishi Sunak, stated that the move would not benefit those in greatest need.
He stated that Ms. Truss was “simply wrong” in ruling out additional cost-of-living adjustments.
Mr. Sunak stated that the tax proposals would not be of great assistance to “people like retirees and those with low incomes, who are precisely the type of families who will require assistance.” He has promised more direct assistance to those most severely affected by inflation.
Ms. Truss has already pledged an emergency budget to halt the increase enacted by Mr. Sunak during his tenure as chancellor.
The pair are vying for the support of Conservative party members to become the next party leader and prime minister.
Voting has begun, and the outcome will be announced on September 5.
In addition to her promise to reduce National Insurance contributions, the foreign secretary, Ms. Truss, plans to reduce taxes and suspend the green levy on energy bills.
Since April, workers have paid an additional 1.25 pence per pound in National Insurance, although Mr. Sunak later raised the threshold at which employees must begin contributing.
Ms. Truss wrote in the Sunday Telegraph that she intended to “immediately address the cost of living crisis” and that she would “hit the ground running by introducing an emergency budget, charting a firm course to get our economy growing to help fund our public services and NHS.”
However, Mr. Sunak, who has argued that inflation must be brought under control before tax cuts, told the Sunday Times, “My top priority is to avoid actions that make the situation worse.”
He stated that the public required “clear-eyed realism and not starry-eyed boosterism” and that his rival’s plans would return less than £200 per year to many families and “are not going to help pensioners and those with low incomes very significantly.”
Mr. Sunak promised to introduce a new multibillion-pound aid package.
Former Labour Prime Minister Gordon Brown has stated that an emergency budget is required immediately.
He wrote in the Observer that Prime Minister Boris Johnson, Ms. Truss, and Mr. Sunak should reach an agreement this week, warning that “a financial timebomb will blow for households in October” when the next increase in the energy price ceiling occurs.
An analysis commissioned by Mr. Brown indicates that some households will be $1,600 worse off annually.
According to a study done by Prof. Donald Hirsch of Loughborough University, the additional funds provided by the government to low-income households fall short of compensating for the losses they incur.
According to the analysis, from October 2021 to October 2022, the incomes of the poorest families have taken three significant hits.
This includes the removal of the £20 per week boost in benefits, a yearly increase in welfare payments below the rate of inflation, and future hikes in the energy price cap.
It was determined that the additional $1,200 in the help supplied by the government does not close the gap since the flat-rate payments do not account for households with larger families and those with varying needs.
Mr. Brown stated, “It is the immediate responsibility of the future prime minister to ensure that families have enough to live through this crisis and beyond.”
Eight million of the most vulnerable households are eligible for the additional £1,200, according to a government spokesperson. This is because the government recognizes that people are struggling with rising prices.
“Through our £37 billion assistance package, we are also saving the average employee over £330 annually through a tax cut in July, letting people on Universal Credit keep £1,000 more of what they earn, and reducing fuel duty by 5p, saving the average family £100,” they continued.
