LONDON (Reuters) – Britain’s lower overall corporate tax rate has failed to boost business investment, which lags all major countries, according to a report on Tuesday. .
UK% corporate tax rate – the lowest among the large wealthy G7 countries – has been According to a plan announced last year by former finance minister Rishi Sunak, it will rise to 31% in 2023.
However, opposition to the rise was an important part of Liz Truss’s success in defeating Sunak to succeed Boris Johnson as Conservative leader and UK prime minister.
New Finance Minister Kvassey Kwarten is expected to confirm this in an emergency fiscal statement on Friday, in which he offers more on how Truss faces the surge Details of energy bills to support the economy.
During the campaign, Truss said keeping corporate tax rates low was crucial to attracting investment, but a report by the Institute for Public Policy Research (IPPR) shows that past tax reductions have not led to more more investment.
The UK reduced its overall corporate tax rate from % in 2007 to )%, but in 2020 private sector investment is the lowest in the G7 at 9.8% of GDP. The UK has the fourth lowest business investment in 2020 among the major rich countries in the 31 Organisation for Economic Co-operation and Development.
“Corporate tax cuts are just a continuation of a losing race that the UK economy has failed to deliver,” said George Dibb, head of IPPR’s Centre for Economic Justice, which describes itself as a progressive think tank.
The headline corporate tax rate does not always clearly reflect a country’s overall business tax burden, and some countries with higher tax rates offer broad exemptions.
Before stepping down as finance minister last month, Sunak had been studying measures to reshape corporate taxation to boost investment.
Low business investment is one of the main reasons economists believe that low productivity and Living standards are growing very slowly.
Weak demand following the global financial crisis, followed by years of uncertainty over the consequences of Brexit, are among the reasons economists have underperformed investment in the UK, as well as the difficulty in measuring the investments in certain service industries.