The five candidates in the contest to replace Boris Johnson quizzed each other during the showdown ahead of a third round of voting on Monday.
Ms Truss, who has promised tax cuts worth £30billion if she becomes Prime Minister, accused Mr Sunak of stifling economic growth by raising the tax burden on workers to its highest level in 70 years.
After she was criticised for a poor performance in the first TV debate on Friday, Ms Truss was on the offensive in the second encounter and attacked Mr Sunak’s record in the Treasury.
She claimed that she had argued against the national insurance hike during Cabinet meetings.
“Rishi, you have raised taxes to the highest level in 70 years, that is not going to drive economic growth,” she said.
“You raised national insurance, even though people like me opposed it in Cabinet at the time because we could have afforded to fund the NHS through general taxation.
“The fact is that raising taxes at this moment will choke off economic growth.”
But Mr Sunak insisted that the NHS needed the extra income following the pandemic.
He added: “I’d love to stand here and say, ‘Look, I’ll cut this tax, that tax and another tax and it will all be OK.’ But you know what? It won’t.”
“There’s a cost to these things and the cost of higher inflation, higher mortgage rates, eroded savings. And you know what? This something-for-nothing economics isn’t Conservative. It’s socialism.”
Ms Truss and Mr Sunak were joined by Penny Mordaunt, Kemi Badenoch and Tom Tugendhat in the ITV debate between the candidates vying to be the next leader of the Conservative party.
They were quizzed on cost of living measures, public sector pay rises, character, the war in Ukraine and their commitment to net zero.
The format allowed each candidate to ask one question of their rivals, with frontrunner Mr Sunak bearing the brunt of the probing.
Ms Badencoch, a former Equalities Minister, attacked him over his time in the Treasury.
She claimed she and colleagues had raised the issue of “Covid loan fraud” with him during the pandemic, but her concerns were “ignored” by the then Chancellor. The fraud has now cost the taxpayer £17billion, she said.
Mr Sunak denied the accusation.
Ms Mordaunt, Ms Badenoch and Mr Tugendhat described themselves as the “new start” candidates having not held cabinet positions under the current Prime Minister.
Mr Tugendhat said Labour would hold their records “against us” at the next election.
“All attempts to paint me as an out of touch individual will fail,” Ms Mordaunt said after a number of attacks on her over her stance on trans rights.
“People want a break from the toxic politics of the past.”
Mr Sunak received the most support during the second round of voting by Tory MPs last week, with 101 backing him.
Trade minister and former defence secretary Penny Mordaunt was not far behind picking up 16 extra backers on Thursday - putting her on 83 votes.
Ms Truss received 64 supporters, while self described “wildcard” Ms Badenoch scored 49 votes last week.
Mr Tugenhart was in fifth place, but was praised for his performance in the first TV debate on Friday, coming out as the winner according to opinion polls.
Tory MPs will knock out another leadership candidate on Monday before a third TV debate between the final four on Tuesday.
Later in the week the candidates will be whittled down to a final two by MPs. Tory party members will then vote for their next leader, who will be declared on September 5.