CBI chief tells Parliament ‘wrong time’ for tax burden to reach 70-year high

An industry leader has warned it is “absolutely the wrong time” to have the highest tax burden in 70 years after the hammering business has taken during the coronavirus pandemic.

Speaking in Parliament, Lord Bilimoria, president of the Confederation of British Industry (CBI), argued it threatened to stifle an already fragile economic recovery.

The founder of Cobra Beer also flagged his opposition to Labour calls for a windfall tax on oil and gas firms which have benefited from soaring global prices in order to help fund a cut in consumers’ energy bills.

The independent crossbencher said it would put at risk investment critical to the UK reaching its net zero climate goal.

He raised his concerns at Westminster as taxes rise to their highest level since the post-war recovery in the early 1950s.

It follows the Government’s decision to increase National Insurance contributions by 1.25 percentage points from April to help fund the NHS and social care and previously announced hikes in corporation tax rates.

The combination of stronger growth and decisions taken by the Chancellor will raise the overall tax burden from 33.5% of GDP pre-pandemic to 36.2% by 2026-27.

Rishi Sunak has blamed the “unprecedented crisis” of Covid-19 and the “extraordinary action” that needed to be taken in response.

In the face of the soaring cost of living, he has faced growing calls to postpone the forthcoming National Insurance increase and levy a windfall tax on oil and gas firms.

Mr Sunak has so far rejected these demands, instead offering support including a state-funded £200 discount on energy bills in October, which households will eventually have to repay.

Speaking on behalf of the CBI, Lord Bilimoria said: “We feel a windfall tax isn’t an efficient way, as it puts investments at risk from companies that are key to our transition to net zero.”

He added: “Would the Government agree that this is absolutely the wrong time to have our tax burden at the highest level in 70 years when businesses have suffered so much through the pandemic, won’t it stifle what is already a fragile recovery?”

Referring to the windfall tax, Tory frontbencher Baroness Penn said: “The Government would agree that an abrupt tax change could put at risk investment in this sector.”

But she added: “As regards to the overall tax burden, whilst it’s high, we have had to take certain decisions to aid our recovery from the pandemic, when we saw the Government put so much support in place.”