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Senior Tories have called on Jeremy Hunt to freeze corporation tax to revive Britain’s ailing economy. Official figures released on Friday will confirm if the country is in recession or has escaped.
Conservative MPs urged the Chancellor to be bold in his upcoming March Budget to help drive growth.
Ex-Cabinet minister Jacob Rees-Mogg said cutting corporation tax in the past had increased the amount paid into Treasury coffers.
He said: “Lower rates generate more income. This comes both from the benign economic effect of lower rates and from an element of tax competition which encourages companies to declare profits in this country rather than in higher tax ones abroad.”
Corporation tax will rise from 19 percent to 25 percent in April for larger businesses.
Ranil Jayawardena, former environment secretary and founder of the Conservative Growth Group, said Mr Hunt should “give more thought” to current corporation tax plans.
He said: “Higher corporation tax will deter the investment we need across the country.”
Conservative MP Jonathan Gullis said: “It’s time to give businesses the helping hand they desperately need.”
CBI director general Tony Danker said the Budget should be “an opportunity to get the UK out of any recession sooner rather than later and transform the UK into a high-growth, innovation-first economy”.
The Treasury insisted most businesses are too small to be hit by the higher rate of corporation tax and received significant help during the pandemic. A source said: “After borrowing £400billion to support the British economy during the pandemic, it’s only fair the very largest businesses contribute a little more.
“Even after the tax rise, the UK will still have the lowest corporation tax in the G7, and over 70 percent of UK businesses won’t see any tax increase at all.”
Policymakers at the Bank of England have said inflation is almost “guaranteed” to come down rapidly this year unless there is an unexpected global event.
Andrew Bailey, the Bank’s Governor, told MPs at the Treasury Committee that he is “concerned” about the continued persistence of inflation, but expects the rate to halve this year.
Meanwhile, the Government’s net zero tsar warned the UK could turn its back on a trillion pounds of investment by 2030 and almost half a million jobs if it does not seize the economic opportunities of tackling the climate crisis.
Conservative Chris Skidmore told MPs: “We’re now in a global net-zero race and we can either continue to lead, or we will follow. The cost of following will always be greater.”
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