Rishi Sunak’s tax rise is already backfiring

It would raise the money needed to fix the health service. It would make sure the burden of paying for Covid fell on the broadest shoulders. And because it would do little more than bring the UK back into line with its major industrial rivals, it wouldn’t even have any impact on our competitiveness. When Rishi Sunak announced the decision to raise Britain’s rate of corporation tax from 19 to 25 per cent back when he was still Chancellor it was sold as a necessary step to restore the public finances, and one that would have a negligible impact on business. But hold on. AstraZeneca said this week that it was planning to build a new plant in Ireland because Britain’s taxes were now hitting it too hard – and it is likely to be far from the last to invest elsewhere.

With Boris Johnson spending money like crazy, and with the costs of the pandemic to grapple with, Sunak may have felt that he had little option but to raise taxes.