A leading think tank has warned that the UK risks becoming an increasingly unappealing place for businesses to base themselves. The Centre for Policy Studies CPS warned the planned hike in corporation tax, the 1.25 percent increase in social insurance to fund social case, and a failure to overhaul business rates was damaging the UK.
The think tank said the tax increases would see Britain fall even further behind the US and Germany in a list of most competitive tax systems. The US based think tank the Tax Foundation places the UK as 22nd on the list out of 37 countries in the OECD. The CPS fears that by 2023 the UK will have dropped as far as 30th - only narrowly remaining ahead of France and Italy. Daniel Bunn, head of global projects at the Tax Foundation, warned: The UK is at a critical juncture with its tax policy.
The levelling up agenda could be curtailed by tax hikes. It will be critical for the Government to focus on reforms that push toward growth and investment. Tom Clougherty, head of tax at the CPS, added: There is nothing wrong with getting the budget balanced, but are we going to do more harm than good with more tax increases? I hope that is not going to be something that looks in retrospect like a huge error, but it looks like it could be. The Chancellor has been looking at how to bring down the UK's debt level after record high borrowing during the pandemic. Net debt had reached more than 2.2 trillion by the end of July this year, the highest rate since March 1962. READ MORE: Liz Truss signs string of hi-tech deals with India.
He has said it is important to remain fiscally responsible and the high debt must be countered by either severe spending cuts or tax rises. Next week Mr Sunak will announce his tax and spend plans for the next year when he announces his budget in the Commons on Wednesday afternoon. Despite pressure from businesses and Labour MPs, he is not expected to announce an overhaul to the business rates system that so many firms have said is holding the UK back. The UK tax burden is set to be the highest sustained level since World War Two. Drippy Boris is morphing into Theresa May says BEN HABIB COMMENT 'We have our own discussions! Lord Frost leaks REACTION He told MPs at the Conservative party conference: I was proud to back Brexit, proud to back leave, and that's because, despite the challenges, in the long-term I believed the agility, flexibility and freedom provided by Brexit would be more valuable in a 21st Century global economy than just proximity to a market — that in the long-term a renewed culture of enterprise, willingness to take risks and be imaginative would inspire changes in the way we do things at home. The UK has a generous business tax regime and remains one of the best places in the world to do business - we have a lower headline rate of corporation tax than any other major comparable economy and competitive reliefs for both research and development. We re committed to supporting business investment, introducing the annual investment allowance increase for another year and extending the super-deduction the biggest two-year business tax cut in modern British history.