Hammond says 2015 tax promises hamper government

Britain's Chancellor of the Exchequer Philip Hammond arrives in Downing Street, London March 29, 2017. REUTERS/Stefan Wermuth

WASHINGTON (Reuters) - Britain’s Chancellor of the Exchequer Philip Hammond said on Friday that earlier promises not to increase key taxes limited his ability to manage the economy, as his Conservative party prepares to set out its manifesto for an election on June 8.

Hammond was forced in March to reverse plans to raise payroll taxes for the self-employed aimed at reducing Britain’s budget deficit amid accusations that it breached a commitment on taxes in the Conservatives’ 2015 manifesto.

Speaking to reporters on a trip to Washington, Hammond said that he wanted Britain to be a “sensibly taxed” economy that did not run a budget deficit.

“It’s self-evidently clear that the commitments that were made in the 2015 manifesto did, and do today, strain the ability of the government to manage the economy flexibly,” he said.

There has been previous speculation that the Conservatives’ 2017 manifesto will see them abandon commitments not to raise the rate of value-added tax, income tax or the national insurance payroll tax.

Reporting by David Lawder, writing by David Milliken; editing by Michael Holden