Rishi Sunak could boost economic growth by cutting taxes in his upcoming Budget, new study claims
- Chancellor Rishi Sunak was urged to slash taxes next week to boost business
- The Centre for Policy Studies believes tax rises will kill economic recovery
- Mr Sunak is considering a hike in corporation tax in next week’s budget speech
Rishi Sunak should slash taxes in next week’s Budget to boost growth, a study says today.
The Centre for Policy Studies urges the Chancellor to learn the lesson of history and avoid tax increases in the wake of a major economic disaster.
Mr Sunak is said to be preparing to unveil plans for a rise in corporation tax in the Budget next Wednesday to reassure financial markets that he is committed to restoring order to the UK’s battered public finances.
Chancellor Rishi Sunak, pictured, is preparing his budget next week which will outline the government’s intentions to return the economy to normality after Covid-19
Part of the government’s plan for recovery is believed to involve massive spending on infrastructure projects
He has also hinted that an increase in fuel duty may be needed after a year in which tax revenues have plunged and spending has soared.
But the report from the Centre for Policy Studies warns that the lessons of major crises, such as world wars, is that countries should slash taxes to encourage business investment.
The centre-Right think-tank said the US had enjoyed ‘near miraculous’ growth after the Second World War at the same time as slashing public spending by two-thirds. By contrast, the UK suffered years of austerity by maintaining high spending and trying to protect domestic industries from competition, it said.
Report author Jethro Elsden said: ‘A key lesson from post-war recovery is that interventionist, high-spending policies lead to lower and slower economic growth.
‘Rather than maintaining big government after the pandemic, what we need is a smaller state which intervenes less – and to give the private sector the resources, support and certainty it needs to power the country back to growth.’
Whitehall sources yesterday indicated that the Chancellor will extend the £50billion furlough scheme and other Covid support until at least the end of June in line with the Government’s ‘roadmap’ for unlocking the economy.
Commons leader Jacob Rees-Mogg also suggested that public spending was likely to remain high in the short term, with the Chancellor expected to unveil new investment in infrastructure alongside record spending on Covid next week.