Corporation tax becomes battleground for UK leadership hopefuls
Two Conservative Party leadership candidates have pledged to cut corporation tax to 15 per cent, the lowest level in the G20, as politicians vie for Boris Johnson’s succession as prime minister.
Sajid Javid and former Health Secretary Jeremy Hunt have pledged to cut the tax from 19% to 15% – in stark contrast to Rishi Sunak’s plan to raise the business tax to 25% by 2023 .
The UK corporate tax burden is already lower than all G20 and G7 countries, with US companies effectively paying 26% due to federal and state taxes.
In his campaign video, Sunak warned against tax promises like “fairy tales that might make us feel better now but will make our children worse off tomorrow.”
Tax cuts to stimulate investment
The Confederation of British Industry (CBI) business group has called for tax cuts to boost investment, calling for a “serious, credible and bold” plan for the economy.
Tony Danker, chief executive of the CBI, wrote in an open letter to the government: “We are currently set for growth of just 1% in 2023 and continue to languish at the bottom of the G7 chart on business investment.”
“It won’t take much to tip us into a recession and if it were to pass, it would prolong the cost of living crisis.”
The CBI has warned against tax cuts aimed at boosting household spending such as income tax or VAT cuts.
Danker wrote: “Growth that relies solely on government or household consumption is doomed to failure, especially in an era of rising inflation and high debt.
Increase in corporate tax
Danker called for the proposed corporate tax hike to be delayed, saying the hike “was never meant to come as growth weakens.”
Danker called for measures including a 100% capital expenditure tax deduction, a permanent successor to Rishi Sunak’s super deduction as well as urgent reform of the corporate rate system.