Downing St battle
Tories back PM’s call for Sunak to axe tax hike
Senior Tories are throwing their weight behind the Prime Minister’s attempt to cancel the Chancellor’s planned tax hikes on businesses.
Rishi Sunak announced in the Budget that Corporation Tax would increase to 25% next year as a payback for support received from the Treasury during the Covid pandemic.
But Boris Johnson wants to reverse the move, even if it could leave a £15 billion-a-year black hole in the public finances.
A Conservative source told The Times that Mr Johnson doesn’t want to put up corporation tax. He’s going to try and cut (the planned rise) in Corporation Tax. He’s going to have a big fight with Rishi on it.’
Senior Tories welcomed suggestions Mr Johnson was willing to battle Mr Sunak over the tax increase amid concerns over the rising bills facing companies and the CBI warning that higher taxes and a weakening economic performance was deterring investors.
Former Cabinet minister Lord Frost said: “The Treasury will of course oppose – they always do oppose tax cuts. But the PM has the final say and we need to get our offer to investors right.”
Mr Sunak may feel that as well as shredding his budget plans, a reversal would cast doubt on his judgement and leave him susceptible to other demands.
He told MPs at the time that, even after the increase, the UK would still have the lowest corporation tax in the G7.
The Chancellor has pledged to cut the tax rates on business investment at his Budget this autumn amid a clamour for immediate action.