Some of Britain’s most influential business leaders are calling on the government to scrap a planned rise in the corporate tax rate and cut it dramatically now.
They say the tax – currently 19% but expected to rise to 25% next year – should be reduced to 12.5%.
It would give Britain’s flagging economy a vital boost as the country faces the specter of stagflation with growth stalling as inflation spirals out of control.
Advocacy: Top bosses insist it’s vital Boris Johnson and Chancellor Rishi Sunak immediately scrap their plans and revert to a tax cut promise made by former Chancellor George Osborne
Last night hotelier Sir Rocco Forte, investment guru Sir Paul Marshall, pub boss Tim Martin, advertising mogul Sir Martin Sorrell, former NatWest chairman Sir Philip Hampton, former boss of Pizza Express Hugh Osmond and Phones4u founder John Caudwell have all warned of a “damaging”. ‘ business tax hike next year.
They insist it is vital that Prime Minister Boris Johnson and Chancellor Rishi Sunak immediately scrap their plans and revert to a tax cut promise made by former Chancellor George Osborne six years ago. Osborne had presented plans to cut corporation tax to 15% to attract more investment to Britain and stimulate economic activity.
In an exclusive article for the Saturday 5pm MoS briefing on mailplus.co.uk, Forte – a Tory donor who gave £100,000 to Johnson’s election campaign in 2019 – warned he could not continue to support it without action to reduce taxes.
He warned that many other donors who want to see business and entrepreneurship properly supported would also withdraw their support unless Johnson reverts to “traditional conservative principles.”
Forte said he was unhappy that Sunak tore up the promise of a 15% corporate tax rate. He added that the hike would have “clear and damaging implications for our economy”.
He said: “Many international companies who previously saw the UK as an attractive place to do business are now wondering whether there are better opportunities on the continent.”
Forte said he felt “more depressed about the UK outlook than at any time since the 1970s”.
Sir Paul Marshall, chairman of investment giant Marshall Wace and a donor to the Vote Leave campaign ahead of the 2016 Brexit referendum, said: ‘Raising corporation tax is the wrong thing to do’.
“The Treasury still fails to understand the collateral benefits of lower corporation tax in terms of attracting global businesses to the UK and encouraging employment.” The reduction in corporation tax translates into an increase in income tax and VAT receipts. He said the tax should be reduced to 12.5%.
The deluge of complaints against the government’s proposals follows widespread criticism of other tax hikes, including a 10% increase in national insurance contributions for people on average wages. The main national insurance rate for employees rose from 12% to 13.25% in April.
JD Wetherspoon boss Tim Martin said corporate tax hikes “threaten businesses and discourage investment, and therefore Treasury revenue”.
He said: “The country needs a sensible economic plan. Have overspent [during the pandemic], huge taxes were levied to make up the shortfall. This bumper car approach is crazy.
Former Pizza Express chief executive and Punch Taverns founder Hugh Osmond has described the corporate tax hike as ‘incredibly stupid’ as many businesses are just finding their feet after lockdown measures have dried up. Osmond, a prominent Conservative donor, said the government cannot decide whether it tries to be low-tax, low-spend or high-tax, high-spend.
Sir Philip Hampton, former chairman of the Royal Bank of Scotland and Sainsbury’s, said the rise in corporation tax “is going to have some impact on investment levels as companies will have less money”.
“I understand the Chancellor’s need to raise taxes. But whether a big corporate tax hike is right at this time is highly debatable,” he said.
Sir Martin Sorrell said inflation is out of control as it heads towards 11%, interest rates are rising – possibly as high as 3% – and a slowdown is inevitable.
He warned that the increase in corporation tax and national insurance “is likely to have a significant negative effect on the growth of the economy”.
John Caudwell, founder and philanthropist of Phones4u, said: “Britain must remain a competitive place to start businesses. We are now in a high tax environment and we need to create growth. Corporate tax will hamper growth.