I was shocked when I saw it being reported that the Conservative Party is considering introducing punishing tax hikes in next week’s Budget. Reportedly, the party plans to jack up corporation tax to 25 per cent and have similar increases to capital gains tax. We now have the bizarre situation where Labour Party politicians are able and willing to attack a Tory government for planned tax increases. What is particularly nonsensical about the alleged plans is that increasing corporation tax to 25 per cent would put the tax at a higher level than even Jeremy Corbyn was campaigning for in 2017.
I remember our policy in that election. How we told the truth about corporation tax. That supporting businesses growth with lower corporation tax rates leads to more money for public services. This was what we stood for, the policy that we believed in. Why has this suddenly changed.
Increasing corporation tax was not a viable or correct choice under “normal” circumstances. There is no reason for increasing corporation tax to suddenly be a good decision now, just as we finally look to be on the last path to recovering from the pandemic. The Government has spent the past year and half, if not more, supporting businesses through the pandemic. Lockdown and the other Covid prevention measures have ripped through our economy and caused huge problems across every sector of the economy. It is just completely wrongheaded for the Government to abruptly change course just as the vaccine clears the path to an opening up of society.
Opening society and businesses back up will create the opportunities they need to get back on their feet and will most likely coincide with the end of government Covid support. However, industry will still be incredibly fragile and even the smallest problems will continue to have major impacts. Companies will need to restock, rehire employees and reopen premises, along with various other costs to ensure that they are ready for the return to “normality”.
This proposed corporation tax increase will simply penalise survival in these difficult times and kick the feet out from under those who have got back up.
Tax hikes restrict ambition, success and the drive for self-improvement. Increasing corporation tax is the worst decision following a pandemic that has disproportionally destroyed small and medium-sized businesses. Taxes on business never just affect the “business” – they affect its employees and customers. Tax income does not come from out of nowhere – higher taxes always lead to higher consumer prices, lower wages, less investment, and fewer jobs.
I came to this country as an immigrant and have worked hard to be successful. I worked my way up and now run my own business. For me, the Conservative Party should be the logical choice for those with aspirations, for immigrants such as myself who come this country to make a better life for themselves. However, if the Government follows through on this mooted plan to increase corporation tax, they will make a tough situation worse.