Now lift lockdown! Sunak budget praised but MPs warn only solution is ending restrictions

Budget 2021: Rishi Sunak announces 25% corporation tax rise

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Meanwhile, other MPs praised Mr Sunak’s confident performance at the dispatch box – although away from Westminster, one think tank chief urged him to target big tech firms rather than increasing corporation tax to 25 percent in April 2023. In a speech lasting almost an hour, Mr Sunak confirmed the furlough scheme will be extended until the end of September, and employees will continue to receive 80 percent of their salary for hours not worked.

Unveiling the corporation tax rise, he cushioned the blow by announcing small businesses with profits of £50,000 or less will continue to be taxed at 19 percent.

He also encouraged businesses to invest their cash reserves with a so-called “super deduction” to reduce their tax bill by 130 percent of the cost.

Mr Sunak said he was maintaining at their current levels the inheritance tax threshold, the pensions lifetime allowance and the annual exempt amount in capital gains tax until April 2026 and, for two years from April 2022, the VAT registration threshold.

The sooner we can get these restrictions off the better

Sir John Redwood

Sir John said: “I am very pleased that the Chancellor has given more support while we still have the pandemic restrictions.

“It is very clear from the numbers that once we get the restrictions of that the economy is still very badly damaged.

“So the sooner we can get these restrictions off the better.”

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Mr Redwood also welcome Mr Sunak’s announcement that the total amount of money borrowed this year – £355billion – was almost £40billion below the projected £399billion.

David Jones, Clwyd West MP and the deputy chairman of the European Research Group (ERG), told “The super-deduction is exactly the sort of fiscal intervention the country needs as it rebuilds after lockdown.

“It will encourage investment in new plant and machinery. It will stimulate manufacturing and help modernise the economy.”

Away from Westminster, Ben Harris-Quinney, the chairman of the Bow Group think tank, had reservations about the decision to increase corporation tax.

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He told “We call for the chancellor to prioritise ensuring globalist corporations pay same lavel of tax as small businesses.

“Online sales taxes are being considered but an online green tax makes little sense when the cost of transport fuel is already taxed at nearly 60 percent through fuel duties.

“The recent victory by employees of Uber, and existing laws like IR36, could be used to make online retailers pay national insurance for their workers given it is increasingly clear such employees are not self-employed.”

David Blake, Professor of Economics at City, University of London, told “The total debt needs to be paid off sooner or later and the Chancellor plans to begin doing this is two years’ time with a rise in corporation tax on the biggest 10 percent of companies from 19 percent to 25 percent of profits.

“Various individual tax thresholds (such as income tax, the pension allowances and inheritance tax) will also be kept fixed and this will raise £6bn pa from 2023 (known as fiscal drag).

“Overall, this is a good balance between continuing with the levelling up agenda and maintaining fiscal responsibility which is critical for the government’s ability to continue to borrow in the financial markets.”

Commending his budget to the House, Mr Sunak said: “Today we set out a plan to protect the jobs and livelihoods of the British people but the promises that underpin that plan remain unchanged from those we pledged ourselves to 12 long months ago.

“To unite and lead, to level up, to create a world-class education system, to keep our streets safe, to keep our NHS strong, to support the most vulnerable, to reform and improve public services, to grow the economy, to spread prosperity, to extend the awesome power of opportunity to all corners of the United Kingdom, and, yes, to be honest and fair in all that we do.

Responding, Labour leader Sir Keir Starmer said: “After 11 months in this job, it’s nice finally to be standing opposite the person actually making decisions in this Government.

“The trouble is it’s those decisions that have left us with the mess we find today – the worst economic crisis of any major economy in the last 12 months, unemployment at 5 percent and as the Chancellor said, forecast to rise to 6.5 percent, with debt of over £2 trillion.

“After the decisions of the last year and the decade of neglect, we needed a Budget to fix the foundations of our economy, to reward our key workers, to protect the NHS and to build a more secure and prosperous economy for the future.

“Instead, what we got was a Budget that papered over the cracks rather than rebuilding the foundations.”

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