- Leaders of six Tory groups unite with businesspeople and economists in warning to Sunak
- Calls on Government to “follow a growth agenda”
- Warns that AstraZeneca snub to UK is “harbinger of what may come”
Senior Tory MPs, businesspeople and economists have united to call on the Prime Minister to “abandon” plans to increase corporation tax in his Spring Budget and “follow a growth agenda” to make Britain a better place to invest and do business.
The letter to Mr Sunak warns that plans to raise corporation tax to 25 per cent in April will result in companies having less money to grow and “create wealth for the good of the country”. It fears that many will follow the example of AstraZeneca and invest abroad.
The letter, co-ordinated by the think-tank, the Centre for Brexit Policy, has been signed by the leaders of six influential Tory groups including the European Research Group (Rt Hon Mark Francois MP), No Turning Back (Rt Hon Sir John Redwood MP), Conservative Growth Group (Rt Hon Simon Clarke MP), Northern Research Group (Rt Hon Sir Jake Berry MP), Conservative Way Forward and Free Market Forum (Greg Smith MP) as well as former leader Rt Hon Sir Iain Duncan Smith MP and former minister Rt Hon David Jones MP.
Leading business figures who have signed the letter include Robert Agostinelli, Lord Cruddas, Sir Rocco Forte, Tim Martin, Sir David Ord, and David Roper, as well as six economists: Roger Bootle, Julian Jessop, John Greenwood, Dr Graham Gudgin, Douglas McWilliams, and Professor Patrick Minford.
The letter describes the decision by AstraZeneca to invest £320 million in the Republic of Ireland rather than in the North of England because UK corporation tax rates are too high as a “dispiriting blow to the UK economy and a harbinger of what may come”.
It highlights the positive effect a 12.5 corporation tax rate has had on the Irish economy, with pharma exports now 2.5 times those of the UK when twenty years ago they were just 40 per cent of the UK level.
It goes on to warn that a 25 per cent rate of corporation tax will reduce the UK’s competitiveness from sixth to nineteenth of OECD countries.
The letter challenges Treasury orthodoxy that higher corporation tax raises higher revenues:
“Predictions that raising corporation tax will provide a significant boost to the public finances are based on shaky ground. From 2010 to 2017, the UK corporation tax was cut from 28 per cent to 19 per cent and revenues almost doubled from £31.7bn to £62.7bn – or in GDP terms, an increase from 2.4 per cent to 2.9 per cent. Although there are multiple factors underlying these figures, analysis by HMRC and HM Treasury a decade ago suggested that as much as 60 per cent of any lost revenue from corporation tax cuts would be recovered from positive changes in firms’ behaviour, including higher employment and wages. In the current circumstances, when the UK economy is potentially at a tipping point, this is surely a gross underestimate.”
ENDS
Click here to read the letter in full.