Pressure mounts on Sunak over planned six per cent rise in corporation tax
Prime minister Rishi Sunak is facing down the prospect of a rebellion over next month’s budget as renewed pressure mounts over a planned increase in corporation tax increase.
Seven top Tory backbenchers and business owners including Wetherspoons boss Tim Martin have urged Sunak and chancellor Jeremy Hunt to scrap the planned six per cent rise.
Corporation tax rates are set to increase from 19 per cent to 25 per cent from April 1, under plans made by Sunak in his role as chancellor – but the move has been unpopular with MPs who fear the plans risk tanking any green shoots of Britain’s economic growth.
In a letter penned by former Brexit minister David Jones, MPs say the rise will see the UK lose out on “potential new jobs and higher national output” and levelling up “hit hard”, while Sunak’s ambition to see Britain become a leading “science superpower will be undermined”.
The note, arranged by the Centre for Brexit Policy, describes the decision by drugs firm AstraZeneca to invest £320m in the Republic of Ireland instead of northern England as a “dispiriting blow to the UK economy and a harbinger of what may come” and warns UK competitiveness on corporation tax among OECD nations will fall from number six to ten.
Signatories included the leaders of several major backbench groupings – Mark Francois, of the European Research Group; Sir John Redwood, of the No Turning Back group; Sir Jake Berry of the Northern Research Group; and Greg Smith, of the Conservative Way Forward.
Conservative Growth Group leader Simon Clarke and ex-Tory leader Sir Iain Duncan Smith also added their names to the missive, alongside businessmen Robert Agostinelli, Sir Rocco Forte, and Lord Cruddas.
However, the government’s own fiscal rules – to cap borrowing at three per cent of the size of the economy and see the debt to GDP ratio falling within five years – mean the treasury is now reliant on putting up the profits tax in order to avoid alternatives such as a NI rise.
A government spokesperson said economic growth was one of Sunak’s “top priorities” and that “record levels of capital investment and R&D spending” had been maintained.
They added: “To promote long term-growth it’s vital we stick to our plan to halve inflation this year and reduce debt.”