Sir Keir Starmer has called for Boris Johnson to rule out a rise in corporation tax in next week’s Budget amid rumours Rishi Sunak could increase the rate to 25 per cent.
Starmer said that “now is not the time for tax rises on families and businesses” at Prime Minister’s Questions (PMQs) today.
The Times today reported that Sunak will set out a plan to gradually raise corporation tax from 19 per cent to 25 per cent in next Wednesday’s Budget.
The increase will help pay off the government’s £280+bn of Covid-19 spending, which has yielded a Budget deficit of around £350bn for the year – the highest proportional spending since World War II.
Each percentage increase of corporation tax is expected to raise an additional £3bn in tax revenues.
The Labour leader put a clear marker down for next week’s Budget by opposing the measure, despite standing on a manifesto of increasing corporation tax and income tax in the 2019 election.
Labour has argued that any potential tax rises and Budget consolidation should be put off until after the UK’s economic recovery is well underway.
Johnson did not rule out the tax rise at PMQs.
“It is preposterous for [Starmer] to talk about tax rises when he stood on a manifesto only a year ago to put up taxes by the biggest amount in this country’s history,” Johnson said.
Next week’s Budget is also expected to include extensions to a raft of emergency Covid support, including the furlough scheme, VAT cut for hospitlaity and retail and a business rates holiday.
The Times also reported today that Sunak is set to extend a stamp duty exemption for house purchases under £500,000 until June.