We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Senior Conservative MPs have voiced opposition, disappointment and surprise at Jeremy Hunt’s budget today after he used it to hike taxes on businesses and quietly increase the tax burden on working people.
Tory MPs had spent weeks lobbying the Chancellor to scrap a planned increase in corporation tax from 19 percent to 25 percent however, in today’s big fiscal event, Jeremy Hunt pressed on with the change.
While he offset the impact somewhat – through a new system of “full expensing”, allowing firms to claim up to 100 percent of the cost of the investment – senior Tories have said the move wasn’t enough, and the Chancellor is hurting the UK’s tax competitiveness.
Former Levelling Up Secretary Simon Clarke told the Daily Express, “there is no world in which our having a corporation tax rate double that of Ireland, our nearest neighbour, is a good thing”.
“It must be an urgent priority to reduce the tax burden on business as swiftly as we can, because this is ultimately passed on to all of us through higher prices and lower growth.”
Jacob Rees-Mogg told the Commons the full expensing policy was like a “salami slice” and is “not a good approach to tax policy!”
Tory grandee Sir John Redwood said the Government needs to understand that at exactly the time the UK is putting up corporation tax our competitors are reducing it, not least the USA.”
He said: “The proof that lower rates produce more revenue and help growth is that GDP per head is much higher in Ireland than in the United Kingdom, and business tax raised per head is much higher in Ireland – four times higher, I think – than here at home in the United Kingdom. As such, I ask the Government to look again at that issue.”
Priti Patel said the Chancellor could still promote economic freedoms by scrapping the planned introduction of the new corporation tax rise.
Former Secretary of State and chair of the Conservative Growth Group Ranil Jayawardena said Jeremy Hunt’s refusal to U-turn on the planned rise will make us “less competitive, reduce investment in the long run, and stifle job creation. All of which are required for growth.”
Tory peer Lord Greenhalgh said: “The move puts the UK above the OECD average headline Corporation Tax rate for the first time for yonks. 3 former chancellors advised against.”
Corporation tax wasn’t the only tax hit the public will face as a result of today’s Budget.
Hidden in Treasury documents’ small print it was quickly discovered the Government’s plan to freeze income tax thresholds will force millions into higher tax brackets.
The Office for Budget Responsibility predicts the freeze will force 3.2 million more people into paying the 20p rate, 2.1 million more into paying the 40p rate, and 35,000 more into paying the top 45p rate – almost a 50 percent increase in taxpayers facing the top two brackets.
It was calculated that the real-world effect of such a threshold freeze was the equivalent of putting 4p onto the basic rate of income tax.
Mr Jayawardena said it will be a concern to many that the Chancellor has chosen to keep Income Tax thresholds frozen until 2028.
He said: “At a time of rising nominal wages, this will be an effective Income Tax rise for workers across Britain, and a review of family taxation would be a good next step for the Chancellor to take.”
Mr Rees-Mogg added his concerns, saying freezing income tax thresholds when you have double-digit inflation is “certainly” worrying.
Don’t miss…
Ellwood denounces Hunt’s £11bn defence pledge as ‘smoke and mirrors’ [LATEST]
Rees-Mogg predicts Chancellor could DELAY Corporation Tax rise [LATEST]
Hunt set to announce £4bn childcare lifeline for parents in Budget [LATEST]
Professor Minford said: “Decisions by businesses on innovation and investment and by multinationals on where to locate their Foreign Direct Investment, in turn, crucial to local technological progress, are motivated by expected profit after tax.
“The Sunak/Hunt regime is determined to stick with its restrictive fiscal policy, on the grounds that this is necessary to head off inflation and to remain solvent.
“The result is the economy running flat if not into an overt recession in the short term, and with the corporation tax rise, weak growth in the longer term.”
Earlier today Andrew Lilico, executive director of Europe Economics, warned that the Government’s new “full expensing” company investment tax break could actually penalise small businesses that rent equipment rather than buying it outright.
The anti-waste Taxpayers’ Alliance think tank told the Daily Express they would continue to push for lower corporation tax, despite today’s defeat.
Not all Tory MPs were angry, however. Veteran Brexiteer Mark Francois told the Express that while he “is a tax-cutting Conservative by instinct” and was concerned by the corporation tax hike, those reservations were “partly offset” by the investment relief measures.
Source: Read Full Article