The Conservatives have shelved plans to cut corporation tax from 19 per cent to 17 per cent.
Boris Johnson made the announcement at the CBI conference in London this morning.
He said the change had been made to free up funding for the Health Service.
“We proudly back business across this country because we understand it is they, you pay for the NHS,” he said.
“Because the NHS is the nation’s priority and our priority and because we believe emphatically in fiscal prudence, I hope you don’t mind that I also announce today that we are postponing further cuts in corporation tax.
“Before you storm the stage and protest, let me remind you that this saves £6bn we can put into the priorities of the British people.”
The announcement attracted a mixed response from business groups.
CBI director general Carolyn Fairbairn said postponing the tax cut “could work” under certain conditions.
“Postponing further cuts to corporation tax to invest in public services could work for the country if it is backed by further efforts to [address] the costs of doing business and promote growth,” she said.
However, free market think tank Adam Smith Institute (ASI) was more scathing.
Meanwhile, ASI deputy director Matt Kilcoyne said it was a “retrograde move”.
“Corporation tax is a particularly poor way of raising government revenue,” he said.
Responding to Boris Johnson’s and Jeremy Corbyn’s speeches to the CBI, Julian Jessop, Institute of Economics Affair economics fellow, was a little more critical.
He said: “Plenty of taxes and regulations that affect the business community are long overdue for reform.
“Unfortunately, the Conservative Party and Labour Party today have dodged tackling the big questions around their future, and have instead proposed some counter-productive policies that may actually damage the economy.”
Johnson also unveiled a package of business tax cuts during the conference.
He confirmed plans to cut business rates, reduce national insurance contributions for 500,000 employers and increase the scope of research and development tax credits.
The Tories have also promised to increase tax relief on the purchase, building or leasing of property.
He emphasised the necessity of leaving the EU to restore certainty to the business community.
“There are huge numbers who may have voted remain – and I include distinguished luminaries of the CBI amongst them – but who just want to respect the result of the referendum,” he said.
“After three a half years they think, we think, I think it is time for the paralysis to end, and we have to get Brexit done because it is the best thing for our national mood, and the best thing to take our country forward.
“It is the best thing for the economy because the worst thing is now is the continuing economic uncertainty, people waiting to take on new staff or invest in new property or just to invest in this country.”