Rishi Sunak’s corporate tax hike risks tarnishing UK’s ‘pro-business’ reputation, warns George Osborne

George Osborne suggested that Rishi Sunak’s corporation tax hike risked damaging Britain’s ‘pro-business’ reputation, as he hit back at suggestions the budget was a repudiation of ‘ Osbornomics”.

Reigniting the row over raising business tax to 25%, the former Tory Chancellor warned it was a ‘mistake’ to believe that ‘you can raise UK business tax by 25% and it doesn’t there will be no consequences.”

“I think as a country you have to be careful what signal you send out to the world,” he told the Institute for Government think tank.

“That’s true of a very high corporate tax rate, if we ever end up there. You’re just sending a message to the world, you know, that Britain is not a particularly enterprising place…just when you want to encourage that in a recovery.

He also hit back at Mr Sunak’s suggestion that his corporate tax cuts had not increased tax revenue, arguing that it “increases revenue going into the treasury” for each percentage of tax taken, although the overall amount has decreased.

Mr Osborne claimed Mr Sunak would probably have preferred to raise the VAT but was unable to do so as he was ‘constrained’ by the Tory manifesto pledge not to raise it, as well as the tax on income and national insurance.

He was joined by his Tory predecessor, Lord Lamont, who said that while Mr Sunak had ‘no alternative’ but to raise corporation tax, it ‘was increasingly proving difficult to extract more juice from this lemon”.

Separately, Mr Osborne added that the government needs to start advocating for new taxes to replace fuel taxes, as revenues start to fall as people convert to electric vehicles.

His comments were echoed by Lord Darling, who suggested that the Treasury should review road pricing, essentially direct charges levied for the use of roads, such as tolls, congestion charges and mileage charges.

It came as Theresa May also took aim at Mr Sunak’s £25billion ‘super deduction’ tax break to boost business investment, arguing it had been captured by ‘Treasury orthodoxy “.

Warning that Number 11 had repeatedly called for higher write-offs when in office, Ms May urged ministers to put more emphasis on research and development to create an ‘innovation economy’ .

Luisa D. Fuller