Two Conservative Party leadership candidates have pledged to slash corporation tax to 15%, the lowest level in the G20, as politicians vie to succeed Boris Johnson as Prime Minister.
Both Sajid Javid and former health secretary Jeremy Hunt have pledged to reduce the tax from 19% to 15% – in stark contrast to Rishi Sunak’s plan to raise the tax on businesses to 25% by 2023.
The British tax burden on companies is already lower than any in the G20 and the G7, with U.S. companies paying an effective 26% due to federal and state taxes.
In his campaign video, Sunak warned against tax promises which are like, ‘Fairy tales that might make us feel better in the moment but will leave our children worse off tomorrow.’
Tax cuts to boost investment
Business group the Confederation of British Industry (CBI) has called for tax cuts to boost investment, calling for a ‘serious, credible and bold’ plan for the economy.
Tony Danker, director-general of the CBI, wrote in an open letter to the Government, ‘We are currently set for just 1% growth in 2023 and to continue to languish at the bottom of the G7 table on business investment.
‘It won’t take much to tip us into a recession and were that to pass it would prolong the cost-of-living crisis.’
The CBI warned against tax cuts aimed at boosting household spending such as cuts to income tax or VAT.
Danker wrote, ‘Growth that relies on only government or household consumption is doomed to fail, especially at a time of rising inflation and high debt.’
Corporation tax rise
Danker called for the proposed rise in corporation tax to be delayed, saying that the rise ‘was never intended to come in as growth weakens.’
Danker called for measures including a 100% tax deduction for capital spending, a permanent successor to Rishi Sunak’s Super Deduction plus urgent reform of the Business Rates system.
