Should we raise cooperation tax in the UK?
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CTUK1111.pptxShould we raise corporate tax in the UK?
Intro
Corporation tax: tax levied on companies' profits.
At Summer Budget 2015, the government announced legislation setting the Corporation Tax main rate (for all profits except ring fence profits) at 19% for the years starting the 1 April 2017, 2018 and 2019 and at 18% for the year starting 1 April 2020.
UK corporation tax cut to cost billions more than thought?
An analysis based on HMRC data suggests that the loss of revenue from the planned cuts, initiated by former chancellor George Osborne but supported by incumbent Philip Hammond, could add up to more than £6bn.
HMRC recently raised its estimate for the amount a 1 percentage point increase in corporation tax could bring in for the Treasury from £2.8bn to £3.1bn per year – meaning the plan to cut taxes by 2p in the £1 could cost about £6.2bn.
Hammond confirmed in the autumn that he would go ahead with Osborne’s promises, despite the need to find £20bn a year more for the NHS by 2023-24
The Labour Plan
Rupert Harrison, a former adviser to Osborne who now works at City investment firm BlackRock, said last week on Twitter that it was “hard to see why further cuts to corporation tax are good value,” while Labour seized on his comments.
Labour has argued that it would reverse the cuts to raise more money for spending on public services.
Conclusion
Torsten Bell, director of the Resolution Foundation thinktank, said the corporation tax cut was “bonkers” given the higher spending requirements of the NHS over the coming decades, adding: “It highlights a big fiscal mistake we’re about to make.”
“There’s not even an argument for these tax cuts from a competitiveness point of view. When you’re already winning the race to the bottom you don’t need to speed up.”
