Rishi Sunak’s corporation tax hike will ‘destroy jobs’ and make the UK one of the most taxed nations in the Western world, a leading Tory MP has warned.
Conservative MP John Redwood has called on the Chancellor to back down on the policy, adding that it could tip the country into recession.
Top accountants and economists echoed his warning, stressing that the consequences could be severe.
Plea: Conservative MP John Redwood has called on Chancellor Rishi Sunak to back down on his corporation tax hike, adding that it could tip the country into recession
The levy will be introduced next April and sees corporation tax rise 6 per cent from 19 per cent to 25 per cent.
Redwood told the Daily Mail: ‘Higher taxes will get him less revenue. They will get him slower growth or recession and damage British business and destroy jobs.
‘It’s a bad policy at a worse time. It will turn off investment when people are worried about a recession and there is less money to attract.
‘I have called on the Chancellor to not raise national insurance – a tax on jobs – or raise corporation tax because you will have less revenue and investment, and not raise taxes overall because you will have slower growth.’
Redwood’s comments come as research shows the tax hike will make the UK one of the hardest places in the world to do business.
Accountants from UHY said the UK is set to drop 16 places in its corporate tax league table – from one of the most competitive countries to lower than the global average.
The UK will be alongside France, and below the European and world average rates for the tax. It will also drop below Vietnam and Egypt.
UHY Hacker Young tax head Andrew Snowdon said: ‘These tax hikes may lead investors to question the UK as a place to set up shop.’
The report, released today, said increases including the national insurance hike will hurt the UK’s reputation as a low tax environment.
It comes as businesses feel the pinch from rising prices, while consumers look for ways to tighten their belts.
Matthew Lesh, at think-tank the Institute of Economic Affairs, said: ‘The corporate tax hike will make the UK less appealing. They should reverse the planned hike in corporation tax [and] replace the ‘super-deduction’.’
A Treasury spokesman said: ‘We had to make tough but responsible decisions to repair the public finances.’
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