Rishi Sunak has promised that Chancellor Jeremy Hunt will announce tax cuts in Wednesday's Autumn Statement.
In a speech in north London on Monday, the Prime Minister said letting "people, not governments, make the best decisions about their own money” was a clear expression of his "governing philosophy."
However, he repeated comments made by Mr Hunt on Sunday that none of the measures announced on Wednesday could put at risk "our progress in controlling inflation”.
He said he was taking “five long-term decisions” for the economy and public finances.
They would focus on reducing debt, cutting tax, building sustainable energy, backing British businesses and delivering world-class education.
READ MORE: Autumn Statement: Shona Robison urges Jeremy Hunt not to cut taxes
Mr Sunak refused to be drawn on what tax could be cut, saying he did not want to pre-empt the fiscal statement.
But there's speculation that income tax, national insurance or inheritance tax could be in line for a chop.
A pick-up in tax receipts means the Chancellor could now have approximately £25bn of fiscal headroom, Goldman Sachs forecast on Monday.
Any cut in income tax could lead to pressure on Scotland's Finance Secretary Shona Robison to follow suit in next month's Scottish Government budget.
On Monday morning, she cautioned Mr Hunt away from "ill-timed tax breaks which would place even greater pressure on the public finances."
It seems likely that some of the extra headroom will go towards making full expensing permanent, allowing business investments in plant and machinery, furniture, technology and more to be deducted from profits to reduce their tax bills.
It was announced in last March's budget but only for three years.
During his speech, Mr Sunak sought to contrast his business background with the past of Sir Keir Starmer and Shadow Chancellor Rachel Reeves.
He said: “I spent most of my career working and investing in businesses large and small. The Chancellor spent his life before politics starting and running businesses. That’s where we learnt about the economy.
“Our political opponents, they’ve got no experience whatsoever of running a business. No wonder they think the answer to every question is for the Government to spend more and do more.”
He said the Government must intervene when a crisis hits and step in when the private sector will not, but said “our opponents are profoundly wrong” to argue that more borrowing is needed.
“We should be as clear eyed about government failure as we are about market failure. And so the bar to intervene in people’s lives should be high.”
READ MORE: Hunt urged not to 'squeeze life out of Scotch whisky industry' with second tax hike
The Prime Minister added: “Whether you like me or not, I hope you know that when it comes to the economy, when it comes to your job, your family, your income, I’ll always take the right decisions for our country.
“I promised you we would have inflation. We took the difficult decisions and we have delivered on that promise.
“So now you can trust me when I say that we can start to responsibly cut taxes.
“And we will now move to the next phase of our plan to grow our economy by reducing debt, cutting tax and rewarding hard work, building domestic sustainable energy, backing British business and delivering world-class education.”
The Prime Minister also declined to spell out details of a possible squeeze on welfare payments, saying only that the current set-up was "not sustainable."
He said: “Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable…
“With over two million people of working age who are not currently working, that isn’t a good situation.
“It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off.
“And over a decade we’ve seen the percentage of people who are essentially deemed not to be able to do any work has tripled. That doesn’t seem like a system that’s working properly. And that’s why we will look to make sure that the system is reformed and supports those who can work to do so.”
Reports last week suggested the Chancellor could increase benefits by 4.6%, the current rate of inflation, rather than, as expected, September's rate of 6.7%.
While this would save the government £2bn, it would hit an estimated 9m households and cost single mothers an estimated £218 a year.
The Prime Minister said his plan was to provide, "work for those who can, a generous safety net for those who can’t and tougher penalties for fraudsters."
“That is what a compassionate Conservative welfare system looks like.”
READ MORE: Jeremy Hunt in cut hint as he warns of 'difficult decision' on welfare
During the speech, Mr Sunak not only contrasted his approach to the public finances to that of Labour, but he also mocked his predecessor Liz Truss.
He claimed Sir Keir Starmer and Rachel Reeves wanted to continue the “big government, big spending approach” of the pandemic, with up to £28 billion of borrowing a year for Labour’s green plans.
“This makes the same economic mistake as last year’s mini-budget, blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.”
The Prime Minister added: “That will be the very clear choice at the next election: A Conservative party that is delivering lower taxes because we have now halved inflation and control spending, or a Labour Party that’s just going to borrow an enormous amount more, not having learned the lessons at all of not just the last 10 years, but of the last two years, and continue with the same failed prescription, which is more government, more borrowing, more spending.
“That does not lead to lower taxes for people, we’ve seen that time and time again, and you will see a clear contrast from us.”
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