‘Wrong time’ to raise firms’ tax

BUSINESS lobby group the CBI has urged the Government not to hit firms with tax hikes to tackle public debt, before there has even been a recovery.

Chancellor Rishi Sunak is drawing up plans for his spring budget – as he considers ways of balancing the books over spiralling Covid costs.

He regards increasing corporation tax as the fairest way to begin raising significant sums of money – as it targets profits rather than people.

But Tony Danker, the CBI director-general, warned: “It would be wrong to raise business taxes when we don’t have a recovery.”

He said increases would undermine the huge support put in place for firms during the pandemic. But businesses are likely to come under pressure to shoulder their share of any tax rises due to be announced by Mr Sunak on March 3.

He is considering the reversal of the reduction of corporation tax, made by predecessor George Osborne, from 28 per cent to 19 per cent.

Boris Johnson has also scrapped plans to cut the rate to 17 per cent.

The CBI has called for Mr Sunak to confirm an extension to help for firms. The measures include shifting to June the end date for the Job Retention Scheme, where the Treasury pays employees 80 per cent of salaries for hours not worked.

The CBI also wants a threemonth extension to the deferral on VAT payment and business rates holiday.

Mr Danker warned of a “cliff edge of financial support”.

He said: “The Government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism.

“But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll.”

The CBI admitted its package of measures would cost almost £18billion.

‘We don’t have a recovery’