Sunak warned Corporate Tax increase plan will reduce incentives for businesses

Sunak's corporation tax plan criticised by Patrick Minford

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Economist Patrick Minford, cited by Liz Truss in her yesterday’s interview to BBC Radio 4 Today, backed Truss’s tax cuts economy plan for the UK and warned Rishi Sunak’s financial strategy to raise Corporate Tax will “reduce incentives for businesses to innovate”. He stressed Sunak’s approach “directly hits productivity, which is the key to growth”. 

Mr Minford told BBC Newsnight: “The fundamentals of the supply side are about incentives, entrepreneurs and entrepreneurial innovation.

“By raising Corporation Tax as Rishi Sunak is planning which Liz Truss is going to reverse, that reduces incentives for businesses to innovate.

“[This] directly hits productivity.

“[Productivity] is the key to growth really.

“On the other point about wages and supply, putting up National Insurance contributions is a very bad way of dealing with labour.

“It raises the cost of labour.

“It lowers what goes into people’s pockets.

“It’s actually bad for labour supply.

“I think what Liz Truss is doing is actually improving labour supply.

“[She is improving] both labour supply and productivity prospects through these measures”.

The comments came as opponent Rishi Sunak openly criticised Liz Truss’s economic plans for the UK.

According to Sunak, Truss’s tax cut plans costing at least £30 billion a year risk stroking inflation and pushing up interest rates.

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The attack came as a new polling of Tory members by YouGov published on Thursday put Liz Truss ahead of Rishi Sunak by 62 percent to 38 percent.

Speaking at LBC and referring to his opponent’s economic strategy, Sunak stressed: “My strong point of view is if the government goes on a high borrowing spree, that is only going to make that situation worse.

“That will mean that the problem will last longer”.

Referring to homeowners and mortgage rates, he added: “It’s going to push up their mortgage rates, if interest rates have to go up very hight to deal with that”.

Despite the criticism from the former Chancellor, Liz Truss defended her tax cut plans for the UK and defined her financial strategy as “affordable”.

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