One of the more stupid ideas – and there are many of them – floating around Conservative circles is the proposal to put up corporation tax to help plug the black hole in the public coffers.
According to weekend reports, Rishi Sunak and his Treasury team are considering undoing the corporation tax cuts made under George Osborne. Remember him? Osborne slashed rates from 28 per cent to 19 per cent and had planned a further cut to 17 per cent which has already been abandoned by the government.
If these reports are correct, then the Chancellor needs to lie down with a hot towel on his brow. It’s a daft idea on so many levels, and a foolish strategy at such a fragile moment.
For starters, jacking up corporation tax again will not raise much money. Most companies, particularly the smaller ones in the hospitality, travel and leisure industries, have had a torrid time, and are barely treading water.
Many of them have lost money rather than made any over the past year, and many have piled up debt through the various loan schemes which now needs to be paid off.
Even if they have made some profit, but are faced with higher corporation tax, you can be sure they will make their accountants sweat for their fees so that their books show even less profit.
Second, companies faced with higher taxes will find other ways of cutting back – they will prune staff, trim salaries and pay lower dividends. Everyone will be a loser.
There is another more compelling reason why raising corporation tax now would be disastrous. Such a move would send out all the wrong messages about recovery, especially to the millions of SMEs and entrepreneurs who are fighting for survival and doing everything they can to stay afloat. And it is those wealth creators that the country will depend on – and their future tax payments – for our future wealth.
Luckily, there is one Treasury minister who seems to get this – Jesse Norman. At today’s Treasury Select Committee meeting, the financial secretary played down the reports, saying that if the UK returned to growth quickly enough there was no “absolutely obvious” need for tax rises. Exactly.
That’s the point. If the vaccination roll-out continues as smoothly as seems likely and we can emerge from lockdown over the next few weeks, then we may even be in for a decent bounce and a V-shaped recovery. Norman needs to have a word with his boss and tell him to have more faith.
Banish the blues
Blue January Monday turned out to be a rather brighter shade than we had expected. The number of UK virus infections is down by almost a fifth on the 46,169 recorded last Monday, and a third lower than a fortnight ago.
Deaths are up slightly on the 529 recorded a week ago but there is always a small time lag because of the time it takes between catching the virus and falling seriously ill.
Public Health England figures also show that London may have passed its peak, with data showing infections falling in all 32 boroughs last week. Deaths and hospital admissions have also levelled out, and Covid-19 related deaths appear to have flattened by January 10, a week after lockdown.
In other brighter news, the PM today confirmed that four million people have now been vaccinated, and suggested that life “would be very different by the spring.” The latest target is to have 13 million of the most “vulnerable” given injections by 15 February.
In contrast, the vaccine rollouts in both Scotland and Wales have been at a slower rate, partly because of different approaches.
The Scottish have made a priority of vaccinating care home residents and healthcare staff first, claiming that more than 80 per cent of those in care homes have now been given the vaccine.
In Wales, which has the lowest vaccination rate in the UK, the situation is more confused. First Minister Mark Drakeford blamed supplies of the Pfizer vaccine for the delays despite the country having one of the highest death rates.
Brushing off the delay as “marginal differences”, Drakeford told Radio 4 that Wales has delayed giving the vaccine because it will not receive the second dose until the end of the month. Hmm.
Don’t blame the jab
Phew. The Norwegian medical authorities say there was no direct link between the death of 33 people shortly after being injected with the Pfizer jab and their deaths.
In an interview with Bloomberg, Steiner Madsen, the country’s medical director, said those who died were over 75 and had serious underlying illnesses. He added that the mild side effects of the vaccine could “theoretically” tip patients into a more serious state than the illness they already had.
However, the Norwegian health officials have advised doctors to assess the risk of giving the vaccine against the side effects. Sounds sensible.
But then Norway has been both extraordinarily lucky and careful: there have been 517 Covid-related deaths and 58,651 cases since the pandemic began.
Maggie Pagano,
Executive Editor