The plan to scrap the corporate tax hike ignores the hard lessons of recent history – when investment has stagnated despite extremely low rates – and is not even favored by business leaders, says the Institute for Public Policy Research (IPPR). Instead, it requires a strategy that goes beyond taxation to boost investment and productivity by tackling chronic problems in housing, energy, transport, skills and childcare. “Corporate tax cuts are just the continuation of a failed race to the bottom that has not paid off for the UK economy,” said George Dibb, head of the Center for Economic Justice at IPPR. “Tax cuts are not a magic bullet for boosting investment and growth – in fact, despite having some of the lowest levels of corporation tax, business investment in the UK is the lowest in the G7. “If the government was serious about boosting investment, it would listen to businesses who want a serious economic strategy to support growth, boost innovation and boost our low productivity.” Friday’s mini-budget is expected to fulfill Ms Truss’s campaign pledge to scrap the corporate tax hike, as one of the policies that will benefit the better off. The levy is expected to increase from 7 p.m. in 25 am next April, after former chancellor Rishi Sunak reversed years of Tory economic loyalty, accepting that low interest rates had failed to spark business investment. The IPPR analysis found that – even at 19p, by far the lowest of the top G7 economies – the UK lagged behind its rivals in the investment race. In 2019, it fell behind Italy and Canada in having the lowest private sector investment in the G7 as a percentage of gross domestic product (GDP), the left-leaning think tank said. The following year, the UK ranked a miserable 28th in a group of 31 developed countries that are members of the Organization for Economic Co-operation and Development. Mr Dibb added: “We’re not just lagging behind even the biggest economies, the UK is consistently the worst performer in the OECD club of 38 developed economies.” He criticized the belief that a government “can cut taxes and deregulate its way to growth, which has failed in the past” – contrasting it with Joe Biden’s “whole of government” approach. A “cut and change” approach – which had seen the government adopt five strategies in just eight years – was also confusing businesses and undermining the UK’s economic credibility, Mr Dibb said. The mini-budget is also expected to cut taxes in a number of “investment zones”, where businesses may also be able to ignore some environmental regulations. But an almost identical policy pursued by George Osborne after 2010 – when they were called “enterprise zones” – also failed to stimulate growth in economically left-wing areas.
