Now is the worst time for Sunak to tax wealth creation
Remember this as well. People react to change. Faced with a big rise in tax bills, and after a six month lesson in running virtually, plenty of businesses might decide that Ireland (12.5pc company taxes), or Hungary (9pc) or the Bahamas (0pc) are just as good a base.
Higher corporate taxes will simply drive an exodus, especially in the high-output, work-from-anywhere economy. It could easily turn into a spectacular own goal.
Finally, surely we want to move business online as fast as possible? You can just about make a case for taxing Facebook and Apple a little more. But one of the most significant developments during the crisis has been this: lots and lots of small companies finding innovative ways of shifting online. That improves productivity and growth, and, hardly incidentally, helps us control the virus.
Why would we want to punish them for that? It makes no sense at all – and, even worse, it will send out a signal that the UK is one of the most tech-hostile countries in the world. In reality, if we raise taxes on business we will only make the recession even worse.
It remains to be seen whether we have to make tough decisions on tax. We might be able to trim spending, borrow more, and somehow engineer a fast enough recovery to avoid it. That remains to be seen. But if action must be taken, we shouldn’t be going after wealth creators. They might seem an easy target, but we will need their energy and ideas more than ever in the tough few years ahead.
