Rishi Sunak has suggested only "idiots" fail to understand why he can't deliver the immediate tax cuts demanded by some of Tory MPs.
The Prime Minister defied calls to reduce the tax burden in the upcoming Budget from his own MPs, as well as billionaire businessman Sir James Dyson who said the Government's economic policy was "stupid".
Tensions have been growing in Tory ranks over the economy the wake of Liz Truss's disastrous tax-slashing mini-Budget which trashed the economy and spent mortgage rates spiralling.
Chancellor Jeremy Hunt was brought in to fix the mess after Ms Truss fired Kwasi Kwarteng to save her own skin. He ripped up almost all of the pair's economic policy.
Mr Hunt is reportedly considering a slimmed down Spring Budget in March have triggered fury on the right of the Conservative party.
Former Tory leader Sir Iain Duncan Smith told the Mail: 'We have got to get growth going. This Government will sink without trace if we don't get growth going by the middle of this year – we won't have a hope of winning the election.
"We are already over-taxed and it is quite clear we cannot tax ourselves out of a recession."
Right-winger Sir John Redwood also warned tax cuts were essential.
He added: "We cannot address the issue of growth without some tax cuts. They must be affordable, of course – but the best way to bring borrowing down and boost revenues is to grow the economy."
But Mr Sunak argued that economic double whammy from Covid and the war in Ukraine mean he cannot slash taxes.
Speaking at an event in Morecambe, Lancashire, he told the audience: "When I was Chancellor I also really preferred it when the Prime Minister didn't comment on tax policy.
"I'm a Conservative, I want to cut your taxes... I wish I could do that tomorrow quite frankly but the reason we can't is because of all the reasons you know.
"You're not idiots, you know what's happened.
"We had a massive pandemic for two years, we had to shut the country down, do a bunch of extraordinary things that didn't come cheap. Now we've got this war going on which is having an enormous impact on inflation and interest rates."
Mr Sunak said it "takes a bit of work" to get the state of the public finances "where it needs to be".
But he vowed to strengthen the economy, secure lower interest rates and get a "grip of" soaring inflation.
"Trust me that's what I'm going to do for you this year, that's what we're going to do while I'm Prime Minister and if we do those things we will be able to cut your taxes," he added.
It comes after the Dyson founder told the Telegraph that ministers seem intent on imposing "tax upon tax on companies in the belief that penalising the private sector is a free win at the ballot box".
"This is as short-sighted as it is stupid. In the global economy, companies will simply choose to transfer jobs and invest elsewhere," he said.
"Our country has an illustrious history of enterprise and innovation, born of a culture which we are in the process of extinguishing. We have got through the worst of Covid but risk wasting the recovery."
Burt the PM defended his strategy when asked about Sir James's comments.
"Of course growing the economy is really important. But what does it actually mean in practice... it means more jobs that pay well," he said.
"That is the simplest way for everyone here to think about it."
Mr Sunak highlighted the "very generous" annual investment allowance, adding: "A million quids' worth of investment you can write off against your tax bill. No other country in the world does something like that.
"I'm very happy for James Dyson to tell me if I'm wrong, but virtually no other country in the world that I know does anything like that for small and medium-sized businesses."
