On Monday, British Prime Minister Boris Johnson disclosed he has placed further cuts on corporation taxes on hold and he will be pumping in more money into services such as healthcare and made it a central issue in the December 12 elections.
“We are postponing further cuts in corporation tax,” said Johnson to business leaders at a conference organized by Britain’s main business lobby, the CBI. “This saves 6 billion pounds ($7.8 billion) that we can put into the priorities of the British people, including the NHS (National Health Service)”.
Britain was on schedule to cut its corporate tax rate to 17% in 2020, down from the current 19%, which is already one of the lowest among the world’s big industrialized economies.
Johnson now faces questions as to how he would pay for the extra public spending that he has promised, without ramping up borrowing sharply.
Earlier in September, Sajid Javid, Britain’s finance minister had announced the biggest increase in day-to-day spending in 15 years in what was widely seen as an attempt to counter the spending promises of the Labour Party.
Johnson’s announcement received a cautious welcome from the head of the CBI.
“Postponing further cuts to corporation tax to invest in public services could work for the country if it is backed by further efforts to the costs of doing business and promote growth,” said Carolyn Fairbairn in a statement.