Corporation tax rise goes against Tory values, suggests former minister
The Institute for Fiscal Studies head also predicted there was only a 50-50 chance that the hike to 25 per cent would actually happen
5 March 2021 • 9:17am
Rishi Sunak’s corporation tax rise marks a “significant departure” from Conservative principles and will have a “long-term detrimental effect” economically, a former Tory chief treasury secretary has warned.
The Chancellor suggested on Thursday that his predecessor George Osborne’s strategy to cut the corporate tax rate should be questioned.
Mr Osborne incrementally slashed the levy from 26 per cent in 2011 to 20 per cent in 2016. It was cut a further percentage point the following year and has remained at 19 per cent since.
Furlough factfile (Image: Express)
“There s all sorts of talk about taxes that might rise, including Corporation Tax but he might be tempted to do some other things as well on wealth taxes and so on.
“And I just think that that would be a mistake and it would be better to focus on growth as far as possible rather than trying to fix the public finances.”
With specific reference to increasing Corporation Tax beyond its current rate of 19 pence in the pound, Mr Jessop explained: “I think it sends a bad signal.
“I don t think it s necessary to raise any sort of tax, including Corporation Tax because I think the economy will rebound strongly and that will fix the public finances without the government needing to raise taxes.
| UPDATED: 14:18, Tue, Mar 2, 2021
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TV licence payments must be met by more people going forward as free licences were removed for over 75s unless they are in receipt of Pension Credit. This was a move which created much controversy, leading to many calling for the fee to be scrapped. A similar stance is taken by some when it comes to Inheritance Tax, payable on the estate of someone who has passed away.
Alexander Hammond, policy analyst at the institute and co-author of 20 Taxes to Scrap: How to grow the UK economy by simplifying the tax system, said: “A low and radically simplified tax system is the best way for our economy to recover from repeated lockdowns and prosper for decades to come.
“Given our newfound post-Brexit freedoms, now is the time for a brave Chancellor to embark on a radical tax-scrapping bonanza. The UK is in the unfortunate position of having many regressive taxes, and this paper suggests a number that could be among the first to go.”
Sam Collins, advisor to the director general at the institute and another co-author of the report, said: “Retaining or increasing distortional taxes will be a block to the British economy growing and harm all of us in the long-term.