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If Rishi Sunak and Jeremy Hunt raise corporate taxes in next month’s budget, it will not only cost the Treasury lost revenue, but force thousands of small businesses to withdraw new capital investment and cut jobs, or both.
In addition to the corporate tax increase from 19 percent to 25 percent, small businesses are facing higher energy costs, supplier delays, corporate rates paid before companies have made a penny of sales, and reductions in R&D tax credits.
Smaller companies also suffer the most from R&D cuts, as it is these companies, not the large ones, that make a greater contribution to overall innovation.
U-turn: Chancellor Jeremy Hunt lobbied for a corporate tax cut to 15% when he pitched to be prime minister last year
According to the Federation of Small Businesses, membership sentiment is lower than at any time since the first lockdown – which is why Sunak and Hunt should scrap this tax increase, which is not only fundamentally flawed, but also fails to generate more revenue.
Far from it. Figures show that after George Osborne cut corporate tax from 28 per cent to 19 per cent, tax revenue doubled from £31.7bn to £62.7bn between 2010 and 2017.
Surely the Treasury must know these figures? If so, why is Hunt continuing to raise the tax?
If there is any doubt as to why raising corporate tax is such a terrible mistake, he should have a quiet word with Pascal Soriot, CEO of AstraZeneca, which is not going ahead with the planned £300 million state-of-the-art manufacturing facility in the North West of England because corporate tax rates are ‘discouraging’.
Soriot is polite. What he means is that this policy is insane. And misled. What better way to “level up” in the Northwest than to build a new factory that will create hundreds of low- and high-skill jobs?
Any other country would offer Soriot millions in grants to build his factory.
It is worth reminding Hunt that last year he lobbied for a corporate tax cut to 15%.
Here’s what he said: ‘We need to start Britain up now. To send a signal: the UK is the most corporate economy in the world.”
What hypocrisy. The only explanation for the hike not being reversed is that Sunak and Hunt are terrified that even the hint of a tax cut will trigger another Truss-like carnage in the bond markets, as witnessed last fall.
However, the situation today is completely different. We have narrowly escaped a recession, interest rates may be nearing their peak and inflation is falling.
They have a month and a day to wake up and smell the coffee.
Flying high
Coming back to Heathrow Airport from Barcelona on a Sunday night was surprisingly pleasant on just about every point.
It was my first overseas trip since lockdown, first time flying with British Airways (brilliant service) in ass years and first time landing at Terminal 5.
There were only very small queues for the non-EU passport control, so no one had a chance to rant or tweet about Brexit.
Staff were on hand to help and direct people to the baggage carousel, while more were outside the exits to escort travelers to the Heathrow Express and the new Elizabeth Line (magnificent feat of engineering).
And it’s fast, crossing London from Heathrow to Liverpool Street station took less than an hour.
What a change not to whine about Blighty’s condition. When we build these big projects, we do them brilliantly. Just need more of it.
No wonder Heathrow is reporting one of its busiest starts to the year since 2020 with over 5.4 million passengers in January. John Holland-Kaye, the outgoing CEO, is right when he says the airport is back to its best.
Even his claim that 98 percent of travelers waited less than ten minutes to get through security last month is believable.
Interesting also that the most popular destination last month was the EU with 1.6 million passengers. Those queues don’t seem to deter anyone from traveling to the continent anyway.
Holland-Kaye, who received a lot of criticism during the lockdowns, leaves delighted. The much-maligned BA isn’t doing too badly either. Only the third runway to sort out now.
Give it some water
Hunter Boot has changed hands more times than most of us buy wellies in a lifetime.
Yet Hunter is doing so well that the private equity owners are looking for new financing ahead of a sale.
Let’s hope Hunter now finds a British owner fit for his royal command. One for the next?
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