Truss’s tax plans19 Oct 2022 17:26
“The abandonment of Liz Truss’s growth plans will saddle Britain with one of the least competitive tax systems in the world, economists have warned.
The UK is set to tumble in the rankings from 26th to 33rd, its worst performance since the US-based Tax Foundation think-tank began compiling an index in 2014.
The Centre for Policy Studies (CPS), which also backed the research, said the decision to reinstate Rishi Sunak’s corporation tax increase from 19pc to 25pc next April removes one of the UK’s biggest potential attractions as a place to do business.
It was among a series of mini-Budget U-turns worth around £32bn per year to the Exchequer, announced by Jeremy Hunt on Monday to calm markets and bring down the Government's cost of borrowing.
Tom Clougherty of the CPS said the Government had little choice but to raise taxes given conditions in financial markets, but warned it will harm the economy’s prospects.
He said: “They have been thrown into crisis mode by the reaction of the markets - they had to do whatever it took to stop gilt yields from climbing and climbing. That is what they have done, it is understandable and appropriate.
“But when the fog of crisis clears, you have got to take stock of the position you are in relative to all of your competitors, and the research shows on tax we are not going to be in a very happy position.”
Mr Clougherty said that ministers should be on the lookout for future opportunities to cut taxes again, as well as chances to simplify the system and reform over-regulated parts of the economy.”
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