Rishi Sunak defends UK corporation tax hike

Chancellor Rishi Sunak on Thursday defended the government’s decision to raise corporation tax, saying the UK was still committed to providing an “internationally competitive” business environment.

In his budget on Wednesday, Sunak announced corporation tax would rise from 19% to 25% in 2023, making him the first chancellor to raise the levy since Labour’s Denis Healey in 1974.

The move, which will bring an extra £17billion a year to the Treasury, has been dismayed by business representatives in the city, who have warned it will send a “worrying signal” to investors.

In an interview with the BBC Today On Thursday, Sunak sought to reassure the sector, arguing that the government was still offering an “internationally competitive tariff”.

“On the increase in corporate tax. . . it does not arrive for two years, because in the short term we want to support economic recovery and when it arrives we will have a lower corporate tax rate than our G7 competitors,” he said. .

Sunak also argued that while it was important to be honest with the public and businesses about the challenges posed by the coronavirus, the government was still committed to a “pro business and pro business” approach and had adopted a series of initiatives to support the economy.

The £25billion ‘super deduction’ tax relief for investment over the next two years would, he said, offer a ‘direct way to help businesses invest’ and ‘stimulate the growth of the industry’. ‘economy”.

The Chancellor also sought to address concerns that the budget failed to allocate funds for certain pandemic-related costs and failed to address long-term funding for the NHS and social care.

The chairman of the Office for Budget Responsibility, the independent budget watchdog, told the BBC on Thursday that the government had ‘set aside no additional resources’ to cover programs such as repeat vaccinations and testing and tracing.

“He’s actually set himself up for tougher spending cycles to come this fall, as he’s set aside even fewer resources to deal with these legacy pandemic issues,” Richard Hughes said.

Meanwhile, Shadow Chancellor Anneliese Dodds has said successive Tory governments have failed to tackle long-term problems with social care delivery and funding. “There will need to be a reasonable financing solution for social care in the future,” she added.

In response, Sunak said the Conservatives remained committed to finding a “cross-party” solution to sustainable social care, but the government’s immediate focus was its response to the pandemic.

He also argued that the government had already allocated £55billion in November’s spending review to “deal with all the different costs of Covid over the next 12 months”.

The government wanted to build the country’s “confidence and fiscal strength” in the long term, Sunak said, and recognized that the country may be dealing with the coronavirus for some time.

“As others in government have also spoken about, this will hopefully become something like the flu that we are learning to live with. . . We can never completely eliminate Covid,” he added.