Jeremy Hunt hopes to jump-start the economy by cutting business taxes in his autumn statement.
The chancellor told the Daily Express it was his “priority” as he sought to boost growth.
Improved public finances have raised hopes that there is plenty of room for pre-Christmas gift bags.
As well as helping businesses, Mr Hunt is considering cutting Inheritance Tax in next week’s crunch announcement – the last major fiscal event before an election year.
He will look at the final forecast of the Office for Budget Responsibility today before making the final decisions.
He said: “I think business tax cuts should always be a priority if you have room for cuts.
“Because ultimately what we need to do is improve the long-term ability of the British economy to generate the wealth we need to pay for the NHS. So that will always be a priority.”
The Autumn Statement will be an attempt by the government to get on the front foot following the Supreme Court’s hammer blow to Rwanda’s deportation plan.
Downing Street has been hit by the good news of inflation falling to 4.6 per cent last month.
Government borrowing, the difference between spending and tax revenue, was £20 billion lower last year than the OBR had predicted.
In addition, the Resolution Foundation claimed that Mr Hunt has an extra £6.5 billion to spend as previously high inflation, together with record wage growth, is pushing up tax revenue.
Overall it means that the government has more than £26 billion of head space, compared to £6.5 billion at the time of the March budget.
While some of this will be kept as a “buffer”, Mr Hunt is considering a range of tax cuts amid increased pressure from MPs.
But he promised not to be irresponsible and risk inflation getting out of control again.
He said: “We are trying to reduce taxes. There are no shortcuts to doing that. The one thing we will not do is cut taxes in a way that encourages inflation.
“Because inflation has just halved, we don’t want to do anything irresponsible that will take us in the opposite direction.”
The chancellor is expected to cut taxes for small businesses, although large retailers such as supermarkets will see an increase in what they pay.
The threshold at which businesses pay VAT could be raised from £85,000 to £90,000.
It is also set to extend “full costing”, a tax relief that allows businesses to offset their investments against corporation tax.
He came under pressure from both Tory and Labor MPs to make the move permanent after announcing a three-year plan in March’s Budget.
There is also speculation that an inheritance tax will be levied.
One option includes halving the rate of inheritance tax, which is charged at 40 per cent on estates worth more than £325,000 with an additional allowance of £175,000 towards a main residence if passed on to children or grandchildren.
The Exchequer is considering plans to cut the rate to 30 per cent or 40 per cent, and is also examining proposals to raise the thresholds for the tax.
Mr Hunt is said to be in favor of imposing an inheritance tax rather than an income tax as it would not have a major impact on inflation.
It is also much cheaper to charge. Abolishing inheritance tax would cost around £7 billion a year, but cutting income tax by 2p in the pound would cost £13.7 billion a year.
The hospitality industry could be in line to extend business rates to protect the future of the hospitality industry and the High Street.
Asked today about cutting taxes, Mr Sunak said: “Well, the most important thing economically that happened this week is that we fulfilled the promise I made to halve inflation.
“Now, of course I know people are still suffering, they have been, so there is work to be done but that is an important milestone because inflation is like a tax: it makes everyone feel poorer.
“It drives the prices of things up, you eat into your savings, your pension, and that’s why it was so important to halve inflation.”
Robert Colvile, director of the Center for Policy Studies, said: “News that there will be positive news on business taxation in the Autumn Statement will certainly be welcome.
“Businesses need certainty to invest in the long term and the UK’s international tax competitiveness is currently being hampered by our high rates. Measures such as permanent full spending, which the CPS has consistently called for, will provide the economic boost we need to return to growth.”
John O’Connell, chief executive of the Taxpayers’ Alliance, said: “Businesses and high streets across the UK have stopped cutting business rates.
“Our retail and hospitality sectors are in trouble, with punitive business rates to blame.
“The Chancellor should make this the first in a series of measures to revive the bricks and mortar business across the country.”
Meanwhile, former Home Secretary Dame Priti Patel is leading calls for the Chancellor to scrap the tax on defibrillators to expand access and save lives.
She is one of 112 MPs who have written to the Prime Minister demanding action.
The campaign is led by the British Association of Healthcare Professions and supported by leading charities.
Dame Priti said: “I hope the Chancellor in his forthcoming September Statement will end this immoral tax on this vital life-saving equipment so that more communities in Witham and across the country have access to defibrillators .”
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