Rishi Sunak has promised to cut business taxes in the fall budget as the Treasury weighs interventions to tackle the cost of living.
The Chancellor will deliver a speech at the CBI dinner which comes after inflation in the UK soared to 9% – the highest level in over 40 years. The jump was fueled by the rising cost of gas and electricity, which pushed household energy bills to record highs.
During Wednesday night’s speech, he will urge investing in innovation to grow the economy and say the government will cut taxes to allow businesses to do so.
“We need you to invest more, train more and innovate more,” the Chancellor will say. “In the fall budget, we will lower your taxes to encourage you to do all of these things. This is the path to higher productivity, a higher standard of living, and a more prosperous and secure future.
The Chancellor is expected to say the government will act to tackle inflation as well as help people get into better paying jobs, setting out a three-point plan on the cost of living, boosting growth and investment .
Options being considered include a 1p cut in income tax from the autumn or a possible reduction in VAT, but further cost-of-living relief measures could arrive sooner, including an increase discount on hot houses for the poorest families.
In his speech, Sunak will say he sees the key role of government as reducing costs for families. “I can’t pretend it will be easy. As I said in the House of Commons yesterday: there is no action a government can take, no law we can pass, that can make these global forces disappear overnight. The next few months will be difficult,” he said.
Sunak is expected to refer to the reduction in fuel duty, council tax cuts and the change in the universal credit taper rate as well as the increase in the national minimum wage as measures that the government has already taken.
“As the situation evolves, our response will evolve. I have always been clear, we are ready to do more,” he will say.
The Treasury said the comments would flesh out promises from Sunak’s Mais conference, where he said the priority for tax cuts would be on business investment. He said the overall tax treatment of capital investments was far less generous than the OECD average.
“It is not certain that the reduction in the overall corporate tax rate has led to a radical change in business investment; we need our future tax policy to be focused and strategic,” he told the conference. “As I develop a business tax strategy for the years to come, it seems likely to me that a priority will be to reduce taxes on business investment.”
Last year, the government announced plans to raise the headline corporate tax rate, the tax companies pay on their profits. This figure is set to rise to 25% for corporate profits over £250,000 from April 2023 – although this was announced alongside investment incentives.
Tory MPs are set to vote against a Labor amendment to the Queen’s Speech on Wednesday, which calls for an emergency budget to tackle the cost of living crisis.
The shadow chancellor said it was ‘unacceptable’ for the government to pile workers amid a crisis and repeated calls for a windfall tax on oil and gas producers to help pay the bills of energy.
“Today’s inflation data will add to the worries families are already facing as prices soar and payroll packages are crushed,” said Rachel Reeves.
MPs told the Commons on Tuesday that some of their constituents were turning to shoplifting for the most part, while another warned he had heard of cases of attempted suicide among those who did not. couldn’t afford to make ends meet.