Liz Truss has been told she needs to rethink her government’s approach to corporate tax to resolve the “incoherence of the current trajectory”. The prime minister yesterday confirmed that she is reversing her plan to cut a tax hike on corporate profits, admitting that her government’s recent “mini-budget” has gone “faster and further” than many expected.
The rate would remain at 19 percent after Ms Truss promised to cancel former Chancellor Rishi Sunak’s plans to set it up.
In a statement following Kwasi Kwarteng’s resignation from the cabinet, the prime minister said increasing the figure to 25 percent would help “reassure the markets about our fiscal discipline”.
But the government has now been told to completely rethink its approach to corporate taxation in what would be seen as a “win-win” move.
The Orthodox Conservatives think tank has called for tax bundling, the same way the income tax is today.
The group argues that companies with a turnover of less than £85,000 are not required to pay corporate tax at all, in order to keep small businesses afloat and encourage entrepreneurs to settle in this country rather than elsewhere.
Those with turnovers between £85,000 and a quarter of a million pounds should be taxed at a rate of just 12.5 per cent, it added.
This is Ireland’s corporate tax rate for most businesses, which many commentators suggest has increased the country’s favor with businesspeople.
The Orthodox Conservatives argued that “this policy could distinguish the UK as the only G7 country pioneering this business trickle down effect; and allows for more investment, not only in start-ups, but also by start-ups in their embryonic and growing phase”.
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Ms. Truss has made an effort to brand her government as the country’s best hope for economic growth.
In her first Conservative Party Conference speech as leader, she railed against the “anti-growth coalition”, including the opposition Labor and Liberal Democrat parties, which she claimed would keep the country down.
The financial newspaper Bloomberg shortly afterwards labeled her first weeks in office as “the most turbulent peacetime debut of a British Prime Minister”, adding: “In just three weeks, her government has been battered by a crisis of confidence in its policies that has led to a pound collapse and a rise in borrowing costs threatening to push the UK into a deep recession and housing market crash.”
Commenting on the orthodox-conservative think tank’s proposal, Mr. Robertson commented: “With the incoherence of the current trajectory in both issue 10 and issue 11, this is a clear, solid policy route that will enable Truss to provide a boon to the traditional membership in the Tory party, while at the same time striving to regain the attention of more progressive voters who see technology as the future of the country’s economy.
“It’s the kind of win-win situation that needs to be acted upon quickly because it could provide an explanatory follow-up to the swing in raising corporate taxes to 25 percent.”
The Treasury Department told Express.co.uk it cannot comment on tax changes outside of fiscal events.