'We've got to balance the books': Sunak won't axe corporation tax rise

Rishi Sunak says the UK has to balance its books and cut borrowing as he rules out cancelling 6p corporation tax increase in March 15 Budget despite calls from three former Chancellors to axe change to help businesses

• George Osborne, Philip Hammond and Kwasi Kwarteng want tax rise axed 
• But Sunak said new rate was still the lowest of major world economies

Rishi Sunak slapped down critics demanding he cut business taxes today as he warned the UK had to ‘balance the books’.

Speaking in Northern Ireland after sealing a Brexit deal with the EU he dashed the hopes of politicians including three of his predecessors as Chancellor.

George Osborne, Philip Hammond and Kwasi Kwarteng have led calls for the plan to increase the rate of corporation tax from 19p to 25p in April to be scrapped.

Taking questions in Belfast this morning the Prime Minister was told the new rate would be double that of Ireland, where corporation tax is 12.5 per cent.

But he defended the UK change, saying the new rate was still the lowest of major world economies. 

‘We are borrowing an enormous amount of money. That’s not good, it is not good for the country, we have got to get our borrowing down and we have got to do that in a responsible way – and that (the tax rise) is going to help us do it,’ he said.

Speaking in Northern Ireland after sealing a Brexit deal with the EU he dashed the hopes of politicians including three of his predecessors as Chancellor.

Philip Hammond and Kwasi Kwarteng have added their weight to demands for a rethink of the levy increase in the Budget next month

It came after George Osborne made a similar intervention earlier this month to back a halt to the tax rise

‘It might sound boring but it is deeply important. Because if we care about those kids who don’t want to grow up in poverty, we are not doing them any favours if we are just putting stuff on the country’s credit card and telling them to pick up the tab, because that is a sure-fire way for them not to have a happy and prosperous life.

‘At 25 per cent it will still be the lowest rate out of all the large economies that we compete with around the world.’

He added that getting his Windsor Framework for Northern Ireland implemented would create ‘the world’s most exciting economic zone’ with access to EU and UK markets.

The Prime Minister, speaking at a factory in Northern Ireland, said: ‘If we get this right, if we get this framework implemented, if we get the Executive back up and running here, Northern Ireland is in the unbelievably special position – unique position in the entire world, European continent – in having privileged access, not just to the UK home market, which is enormous… but also the European Union single market.

‘Nobody else has that. No one. Only you guys: only here, and that is the prize.

‘I can tell you, when I go around the world and talk to businesses, they know that – they’re like: ”That’s interesting. If you guys get this sorted, then we want to invest in Northern Ireland, because nowhere else does that exist.”

‘That’s like the world’s most exciting economic zone.’

The Government aims to work with international companies to help them ‘take advantage of Northern Ireland’s very special position’, he added.

‘And they are queuing up to do so, particularly from the US actually.’

Mr Kwarteng scrapped the planned increase from 19p to 26p when he was briefly in No11 last year, but the U-turn was scrapped by Mr Hunt when he replaced him.

He told the Telegraph at the weekend the higher tax ‘doesn’t help our competitiveness’, adding: ‘We have got to look at ways to improve our attractiveness to foreign investors.’ 

And Mr Hammond added: ‘My view on corporation tax is always that it’s better to have lower than higher. I am quite disappointed that we will be increasing it to 25 per cent.

‘Businesses would accept 25 per cent corporation tax if they felt they had all the other bits in place for a growing economy. But the labour market is not working, the planning system is not working and none of the preferential trade deals with big powers around the world have come to pass.’

It came after George Osborne made a similar intervention earlier this month, warning it could drive investment and companies away from the UK.

The current Chancellor Jeremy Hunt has told Conservative MPs not to expect tax cuts in the spring Budget, but many backbenchers are pushing for Mr Hunt to reduce the burden on business to drive growth.

Mr Osborne, who served as chancellor from 2010 to 2016, told BBC Radio 4’s Today programme: ‘Of course, it’s more popular to increase taxes on business than on individuals and in some ways easier to do than trying to cut public spending.

‘However the reason that I reduced business taxes was to attract investment and attract research and attract companies like AstraZeneca, and if you put up taxes then you will potentially have the opposite effect.’

On Saturday the move to cut taxes gained speed as former home secretary Priti Patel made a similar demand.

The senior Conservative has argued that ‘now is not the time’ for an increase in the tax on big business.

Ms Patel has also called on Chancellor Jeremy Hunt to pull out of an international agreement preventing corporation tax from falling below 15 per cent.

Britain was signed-up to the deal by Prime Minister Rishi Sunak when he was chancellor, in a move brokered by the Organisation for Economic Co-operation and Development (OECD) and heralded by the US.

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