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Jeremy Hunt is scheduled to meet Conservative MPs pushing for tax cuts this week in an attempt to stem mounting backlash against the upcoming budget.
At the annual fiscal announcement in two weeks’ time, the prime minister will confirm that the corporate tax will jump from 19% to 25%, arguing that the public finances are too weak to make significant changes to tax and public spending rates.
He has come under pressure from Tory back-ventures and several former prime ministers to reverse the corporate tax hike, which they say will discourage businesses from investing in the UK.
Hunt has repeatedly said that tax increases are necessary to stabilize finances and meet his “fiscal rule” to reduce government debt as a percentage of GDP over the next few years.
This week, the prime minister is understood to be planning a meeting with the Conservative Growth Group, a supporter of Liz Truss.
A model produced by European Economics for the right-wing lobby group the Taxpayers Union suggests a £30.2bn decline in UK GDP by 2033, equivalent to 0.9% of the total. . ahead.
Former Minister Ranil Jayawardena, one of the leaders of the Conservative Growth Group, said: This model from European Economics shows that jobs are created, investment is boosted and pays off without him simply raising the corporate tax from 19% to 25%.
“Abolition of this tax increase should be reconsidered at a time when it is necessary for business success. Just one example that would have grown: The “abacus economics” some people like was disproved by just one company. ”
Three recent former prime ministers – George Osborne, Philip Hammond and Kwasi Kwarten – have warned that tax increases are a mistake. according to Sunday Telegraph.
Hammond, who ran the Treasury Department under Theresa May, said: However, the labor market is not working, the planning system is not working and none of the preferential trade agreements with the world’s major powers have been concluded. ”
A government spokesman said, “Economic growth is one of the prime minister’s top priorities. Our corporate tax rate remains the lowest in the G7 since April.”