Former home secretary Priti Patel has called on the chancellor to reverse plans for a rise in corporation tax for big businesses. Jeremy Hunt is due to give his spring budget on 15 March, a day being targeted by transport and civil service unions for strikes, with corporation tax set to rise from 19% to 25% in April. Writing in the Daily Telegraph, Patel urged the chancellor to use the budget to halt planned tax increases and said it was “not too late” for him to “back business”.
She said: “It is not too late for the chancellor to back business and end the current political obsession of regulation, high taxes and interference with business. “The chancellor must send a positive signal to business in the budget which supports jobs and economic growth. Now is not the time for an increase in corporation tax.” The planned rise in corporation tax was agreed by Boris Johnson’s cabinet, of which Patel was part. She also called on Hunt to pull out of an international agreement preventing corporation tax from falling below 15%. Britain was signed up to the deal by 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. “Just like the issue of the OECD agreement, everything needs to be paused for the benefit of businesses around the country,” she added. Sunak, announcing the deal in October 2021 when Patel was home secretary, said it would lead to a “fairer tax system, where large global players pay their fair share wherever they do business”. Hunt is also under pressure from the right of his party to slash taxes before the next election in an effort to revive the UK’s economy, which only narrowly avoided falling into recession last year. Former prime ministers Johnson and Liz Truss are among those advocating for cuts. The calls come despite the tax burden on the country – the ratio of taxes as a share of gross domestic product (GDP), a measure of the size of the economy – reaching their highest levels since the 1950s during Johnson’s time in Downing Street. Truss’s attempts to fire up the economy – a £45bn spree of unfunded tax cuts, announced by her chancellor Kwasi Kwarteng – sent the value of the pound tumbling and pushed up mortgage rates in the autumn.