Boris Johnson has put further cuts to corporation tax on hold in order to invest an additional £6bn in the NHS and other public services.
Addressing the annual conference of the CBI business lobby, the Prime Minister said it was the “fiscally responsible thing to do at the present time” to put the money into the “priorities of the British people”.
Corporation tax was due to be cut from 19 per cent to 17 per cent in 2020, the final stage in a plan first unveiled by George Osborne that has seen the headline business tax reduced from 28 per cent since the Conservatives came to power.
Corporation tax revenue has risen even as the tax rate has been cut, but the independent Institute for Fiscal Studies said this was due to improving economic conditions since the financial crash, rather than any impact from the tax cut itself.
CBI director general Dame Carolyn Fairbairn said delaying the tax cut for her members “could work for the country if it is backed by further efforts to cut the costs of doing business and promote growth”.
But the move was dismissed by shadow Chancellor John McDonnell as a “temporary pause in the Tories’ race to the bottom” on corporation tax.
CBI delegates also heard from Labour leader Jeremy Corbyn, who defended his business credentials and his party’s plans to introduce a 32-hour work week and raise corporation tax back to 26 per cent. “It’s sometimes claimed that I’m anti-business,” Mr Corbyn said. “That is complete nonsense. It’s not anti-business to be against poverty pay. It’s not anti-business to say the largest corporations should pay their taxes just as smaller companies do.”
Jo Swinson told the conference that the Liberal Democrats were the “natural party of business” and announced her party would scrap business rates in England if they form the next government.
Ms Swinson was cheered as she said the Lib Dems would revoke Article 50, and said “any form of Brexit, whether it’s hard or soft, blue or red, will be bad for jobs, business and our public services”.