7 months ago
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Jeremy Hunt said he would choose cutting taxes for businesses before any other area as a report found British firms will pay more tax this year than at any time since the 1940s.
Analysis by tax expert Dan Neidle has revealed that companies are paying a greater proportion of their profits to the exchequer than in the 1970s – after the corporation tax rate went up from 19 per cent to 25 per cent earlier this year.
It comes as Mr Hunt faces mounting calls from MPs gathered at the Conservative Party conference to cut taxes in a bid to boost growth.
But the Chancellor told a fringe event that while lowering business taxes was his 'first priority', the Government was 'not in a position to have that discussion'.
Mr Neidle, founder of think-tank Tax Policy Associates, looked at the impact of hiking corporation tax from 19 per cent to 25 per cent.
Jeremy Hunt said he would choose cutting taxes for businesses before any other area
Rishi Sunak attends as Jeremy Hunt MP, Chancellor of the Exchequer makes a speech during the second day of the the Conservative Party Conference
Ministers routinely point out that the rate is still low compared with past years – down from more than 30 per cent in the 1990s and 52 per cent in past decades.
'This is easily the highest effective rate of tax UK companies have paid since the 1970s – it's not even close,' Mr Neidle said.
The rate would be even higher for larger businesses – as smaller firms pay a lower headline rate and qualify for more tax breaks.
He added: 'I'd be reasonably confident the ETR [effective tax rate] is now the highest since the WW2 excess profit tax was abolished in 1946'.
Mr Neidle said raising corporate tax was a bad idea but it was 'the least of several bad ideas'.
