Pressure is mounting on Jeremy Hunt to bring in tax cuts ahead of the General Election next year.
And net public sector borrowing was at £4.3billion in July, which is less than the median forecast of £5billion.
But Julian Jessop, from the Institute of Economic Affairs, told Express.co.uk the Government may well bring in tax cuts ahead of the election for political reasons rather than based purely on the economic situation.
He said: “Rishi Sunak has said that he would like to cut the basic rate of income tax and 1p off would send a clear political message.
“This would also reinstate the planned 1p cut which was cancelled by Jeremy Hunt last autumn.”
When Mr Sunak was Chancellor, he set out plans for a 1p income tax cut for 2024 but this was shelved by Mr Hunt last autumn.
The Prime Minister has previously spoken about his plans to cut the basic rate of income tax by 2p or to reduce National Insurance by a similar amount.
Mr Hunt said after the latest borrowing figures were published: “As inflation slows, it’s vital that we don’t alter our course and continue to act responsibly with the public finances.
“Only by sticking to our plan will we halve inflation, grow the economy and reduce debt.”
The personal allowance for income tax is currently £12,570 and will remain at this level until April 2028.
Tax cuts would be welcomed by many Britons after Mr Hunt brought in several tax increases that came into effect in April this year.
This included the capital gains tax exemption allowance reducing from £12,300 to £6,000, and this will fall again to £3,000 from April 2024.
Rising earnings mean many people are paying more taxes while the rising cost of living is continuing to squeeze many budgets.
A person can find out what rate of income tax they pay by checking the tax code on their payslip.
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