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Former Home Secretary Priti Patel has urged the prime minister to use next month’s budget to halt the planned corporate tax hike.
The senior Conservative MP who left the Cabinet when Boris Johnson resigned said: daily telegraph He argues that “now is not the time” to raise taxes on corporate profits.
The tax will be raised from 19% to 25% in April under plans agreed while she worked in Boris Johnson’s cabinet. The increase is expected to generate an additional £18 billion in government revenue annually.
Her intervention comes amid increasing pressure on the government from right-wing Tories to cut taxes to boost “growth.” Critics say such a move would be out of reach and would risk repeating Liz Truss’ mistakes.
In addition to calling for a halt to tax increases, Patel called on Prime Minister Jeremy Hunt to withdraw an international treaty that prevented corporate taxes from falling below 15%.
Britain signed the deal when Prime Minister Rishi Sunak was prime minister, in a move brokered by the Organization for Economic Co-operation and Development (OECD) and heralded by the United States.
Sunak, who announced the deal in October 2021, when Patel was home minister, said it would lead to “a fairer tax system where large global players pay their fair share wherever they operate.” .
Mr Patel said:
“The prime minister must send a positive signal to businesses in a budget that supports jobs and economic growth. Now is not the time to raise corporate taxes.
“As with the OECD Agreement, everything needs to be put on hold for the benefit of businesses across the country,” she added.
The government plans to increase corporate tax from 19% to 25% from April for companies with profits of £250,000 or more (about 10% of actively trading companies). .
For businesses below £250,000, the current level will be maintained.
Hunt plans to submit the spring budget on March 15th. The day is the subject of strikes by transport and civil servants unions as part of a long-running public sector dispute over wages and working conditions.
The prime minister is under pressure from party rights to cut taxes ahead of the next election in a bid to revive a stagnating UK economy.
Proponents of the tax cut argue that the tax increase will reduce the incentive for large companies to locate and invest in the UK.
But proponents of higher tax rates argue that even with higher rates, the UK’s corporate tax would remain the lowest in the G7.
Proponents of low tax rates often claim that low corporate tax rates lead to increased earnings by encouraging investment, but critics say there is little evidence that this is true.
Since 2010, when the corporate tax was 28%, there have been several instances of increased revenues after tax cuts. The Institute for Public Finance (IFS), an economic think tank, Said.
Some point to the mistakes Liz Truss made during her brief tenure as prime minister as a warning sign of the risks posed by prioritizing corporate tax cuts over fiscal responsibility.
A member of parliament said I LAST MONTH: “Seriously, do we start over again? What’s your definition of madness? We didn’t start over in September enough, so let’s start over in February. For the birds.”
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Former prime ministers Johnson and Truss are advocating cuts as their supporters challenge Rishi Sunak from the right.
Ms Truss’s attempt to revive the economy will come as the £45bn unfunded tax cut announced by her Prime Minister Kwasi Kwarten will cause the pound’s value to plummet in the fall, pushing mortgage rates down. was pushed up.
The tax burden (taxes as a percentage of gross domestic product (GDP)) remains high under Mr. Sunak, even after he was forced to roll back many of his tax cuts under the influence of Mr. Truss’s mini-budget. .
Following Mr Hunt’s fall statement in November, the Office of Budget Responsibility plans to raise taxes by around £25bn and cut spending by more than £30bn by 2027-28, so the tax burden will be reduced by 2024. said to peak at 37.5% of the year. 25 – Highest level since the end of World War II.
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Hunt appeared earlier this week to rule out any change in tax policy after recording an unexpected monthly surplus in January, partly because government borrowing fell short of expectations.
The Office for National Statistics has revealed that the government reported a surplus of £5.4bn last month. This is when tax revenue received is greater than government spending, driven by record returns from self-assessed income taxes.
But Hunt told reporters the numbers were “not as significant as people say they are.”
The UK government has previously defended the planned corporate tax hike, saying it “will still be the lowest in the G7” after April.