Sunak’s corporation tax plan criticised by Patrick Minford
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Priti Patel has urged the Chancellor not to press ahead with a planned increase to corporation tax, expected to be unveiled in today’s budget. The former home secretary said post-Brexit Britain should be “maximising our freedoms” through cutting taxes and red tape. She warned the UK’s retail landscape is being “absolutely hammered” by “uncompetitive” levels of corporation tax.
Chancellor Jeremy Hunt will unveil his budget today, in which he is expected to raise corporation tax from 19 to 25 percent.
Ms Patel said: “What we’re seeing right now – with flight of capital from the United Kingdom and investors going to other jurisdictions – it has serious consequences for the long-term health and wellbeing of the economy.
“At the end of the day, business creates jobs, the government doesn’t create jobs – and it’s jobs that secure people’s livelihoods in our country.”
The former home secretary, who served in Boris Johnson’s cabinet, criticised the Government for excessive “state interference” and “bureaucracy”.
She said: “The Conservative party is nothing if it does not stand for low taxes and sound money and importantly also the ability to help people do well and prosper and stand on their own two feet.
“But all we’ve seen is too much state interference, state bureaucracy and regulation. Britain post-Brexit wants to actually get rid of all that. “
While she acknowledged that “fiscal tightening exists for a reason”, the MP for Witham urged the Treasury to prioritise the UK’s “competitiveness” and “maximising our Brexit freedoms, tax freedoms and tax sovereignty”.
“We cannot speak about tax freedoms in one breath and then tie our hands behind our backs in tax sovereignty on other things such as corporation tax, it’s just incoherent and inconsistent”, Ms Patel added.
As Chancellor, Mr Sunak announced plans to raise corporation tax from 19 percent to 25 percent in his March 2021 budget, as a way of filling the gap in Government finances created by the pandemic.
He said: “The Government is providing business with over £100billion pounds of support to get through this pandemic so it is fair and necessary to ask them to contribute to our recovery.”
Alongside this Mr Sunak promised a “super deduction” to encourage businesses to invest.
But Ms Patel criticised this approach, describing it as “incoherent”.
She warned: “You cannot compensate for high and uncompetitive levels of corporation tax with notions of ‘super deductions’ and handouts.”
The MP for Witham accused Mr Sunak’s Government of “giving with one hand but taking with another”.
Mr Hunt has been urged to “streamline” the UK’s tax system, with Ms Patel warning that the UK “cannot keep hiding behind high levels of bureaucracy and regulation”.
The Treasury has been contacted for comment.
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