The increase in tax being paid by corporations has sparked an enormous debate about the government's attitude to business - at the heart of which is whether or not low rates of corporation tax provide incentives for businesses to invest.
His successor, Philip Hammond, quickly distanced himself from that and, while not announcing any reductions to the rate himself, remained committed to the 17% target.That was as low as it got as the government was forced to put tax-cutting plans on hold in the wake of the pandemic.
As a result, as the IFS and others have pointed out, the amount of corporation tax raked in by the government as a proportion of GDP has barely moved.Please use Chrome browser for a more accessible video playerCorporation tax as a proportion of UK GDP rose to 2.9% in 2019-20, its highest level since before the global financial crisis more than a decade earlier, but then sank to 1.8% in 2021-22 as company profits were crushed during the pandemic.
He said at the time:"The government is providing business with over £100bn pounds of support to get through this pandemic so it is fair and necessary to ask them to contribute to our recovery."His plans were temporarily reversed by Kwasi Kwarteng but now, with Mr Sunak in Number 10, the increase is going ahead again - even though the chancellor, Jeremy Hunt, supported actually cutting corporation tax to 15% during his campaign to become Conservative leader.
"What really determines investment is the certainty of the business environment and right now the UK is a very uncertain place."In 2019, of countries in the OECD , only Greece and Luxembourg came below the UK in a ranking of corporate investment as a proportion of GDP.
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