The Liberal Democrats have accused the government of planning to hand big banks an effective tax cut of more than £6bn over two years, as Liz Truss plans to scrap the proposed rise in corporation tax.
The promise to reverse course on the planned rise in corporation tax was a centerpiece of Truss’s campaign to become Conservative leader, with the change expected to be included in Chancellor Kwasi Kwarteng’s mini-budget on Friday.
But Liberal Democrat leader Sir Ed Davey hit out at the plan, calling it “disgraceful” as he cited new research suggesting that major banks and finance companies will see tax cuts of £2.6bn in 2023/24, followed by another pound 3.6 billion the following year.
The research, by the House of Commons Library, was commissioned by the Lib Dems and the party is calling on the Prime Minister and Chancellor not to go ahead with the tax freeze plan.
The finance and insurance industries, the party said, would benefit more than any other sector from the plan.
– It is shameful that the Conservative Party chooses to cut taxes for the big banks, while families and pensioners are still struggling to pay their bills this winter.
“The government’s measures will still see people’s energy bills double compared to last year. Meanwhile, big banks will celebrate a big payday under the Conservatives as families face the choice between going cold or hungry.
Truss, who has taken charge of Number 10 amid an unprecedented cost of living crisis and rising inflation, has placed tax cuts at the center of her plan to stimulate growth in Britain.
Speaking in New York to bosses from firms such as Google, Microsoft and JPMorgan Chase, the Prime Minister said her government wanted “lower, simpler taxes in the UK to stimulate investment, to get more businesses going in the UK, but also to to encourage more people to go to work’.
Commons Library researchers calculated the tax savings expected for the finance and insurance industries by multiplying each industry’s average share of corporation tax liabilities in 2017/18 and 2019/20 by the estimated revenue that would be raised in 2023/24 and 2023/24 from increasing the rate on corporation tax at 25% as planned.
“It’s time for Liz Truss to put the British people first by scrapping these bankers’ tax cuts and helping hard-pressed families instead,” said Sir Ed.
The Ministry of Finance has been contacted for comment.