UKIP has a new hand: economy/corporation tax

EXCLUSIVE: Already tough to raise VAT rates, the government is now considering deeper cuts to health and childcare Ideas for lowering household and personal taxes have emerged from a wide variety of wings of…

UKIP has a new hand: economy/corporation tax

EXCLUSIVE: Already tough to raise VAT rates, the government is now considering deeper cuts to health and childcare

Ideas for lowering household and personal taxes have emerged from a wide variety of wings of the Conservative Party, and the Right is becoming unravelled. On the morning of July 20th the Telegraph reported that Chancellor Philip Hammond is considering another cut to corporation tax and some close advisers were involved in the drafting of that proposal. The report, from “Conservative MP Andrew Bridgen,” opened:

Britain’s Chancellor, Philip Hammond, has held informal discussions with other senior members of the government about cutting the corporation tax rate to 15 per cent. Mr Hammond’s interest in a further cut was first disclosed by Brexit-backing Conservative MP Andrew Bridgen at the end of June. “It would give UK businesses a competitive advantage over those in the rest of the world and help to rebalance our economy,” Mr Bridgen said in June. The Conservatives are likely to give greater certainty about tax rates in an effort to end public anxiety about them. Higher than normal public sector employment and growth had made the company tax rate the lowest in the G7.

He isn’t alone. His colleague, Jacob Rees-Mogg, has already indicated his support for a cut. By contrast, his fellow Brexiteer and Minister Esther McVey recently rejected a cut, saying:

“Businesses will not be able to afford that, certainly because the others being talked about have got a lower rate,” Ms McVey said.

Nor, for that matter, does the government need to increase business tax rates. The last general election’s manifesto committed the Conservatives to “maximise national income” without a surplus. The Government’s recent Autumn Statement looked to repatriate £12.5 billion from the Exchequer’s rainy day fund – into the Treasury’s circulation. Tax cuts would require a vote in Parliament.

Some advocates of further tax cuts, like Mrs McVey, have argued that tax cuts will even balance the books. In an interview with The Telegraph, Philip Hammond set himself against this contention:

“I don’t think the net effect will lead to a current-year deficit reduction. I think it will add to the overall debt burden that we have. It’s more likely to raise the tax burden and the borrowing burden over the longer term, rather than bring us down towards balance.”

A split within his party is conspicuous. Just consider a recent poll conducted by polling firm Survation. Among Conservative voters, 54% believe the Tories should increase the number of foreign doctors while 59% agreed with the statement that:

Britain’s immigration levels are too high.

If this recent poll is to be believed, most Conservative voters strongly support at least four different policies on which the right wing of the party has lobbied. To recap: A cut in corporation tax, for example, and a reduction in the NHS charge and toe duty on beer, diesel and petrol. But they just about reconcile themselves to higher taxes on individuals, at least while Mrs May is still Prime Minister.

Meanwhile, Mrs May’s ability to command a majority at the next general election is in tatters. David Cameron’s polling superiority over Ed Miliband’s Labour Party was the basis of his 2010 election majority. As a Bloomberg headline put it, “But Even Modi Has Special Word for UK Parliament.” And who is David Cameron’s replacement? Theresa May, who has made a few pretty clear comments on the issue of British sovereignty.

I haven’t even mentioned the result of the Europe referendum, and who will be the next Prime Minister? Expect UKIP and the DUP to try to use it to its own advantage when elections to the upper house of the Parliament convene on September 10th.

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