Hiking taxes will 'stifle recovery' after Covid 'hell', CBI chief warns

30 January 2022, 23:02 | Updated: 31 January 2022, 09:41

CBI President calls on Rishi Sunak to slash taxes, not raise them

The president of the CBI has slammed the Government for hiking taxes, warning it will "stifle recovery" after the country has "just been through hell".

Boris Johnson and Rishi Sunak after facing a backlash from Tory MPs over the decision to press ahead with a rise in National Insurance while families are being hit with 'crippling' energy bills and inflation.

Lord Karan Bilimoria told LBC's Nick Ferrari: "We've had one tax after another going up, being announced to go up and now we've got this National Insurance rise... then the corporation tax from 19 to 25 that's coming up next year, you put that all together and we've got the highest tax burden in 70 years.

"Now step back from it, we have just been through hell, businesses have been shut... now we're trying to come out of this, the recovery has been so fragile."

He pointed to the "energy crisis, queues at the fuel pump, inflation, interest rates going up, taxes going up", adding "how much can the consumer bear, how much can businesses bear, this is the time that we need that support that the Government has given us".

"You can't suddenly say now you've got to make the books balance, now's not the time, you can put up taxes later on, now's the time to generate investment in growth, which will create the jobs which will pay the taxes which will pay down the debt," he said.

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Mr Johnson faces a crunch week in his premiership, with the long-awaited Sue Gray report due to be released as well as mounting pressure for him to tackle the cost of living.

Mr Johnson has been facing questions as the cost of living soars, with energy bills skyrocketing and the expectation they will surge further - potentially to nearly £2,000 - when the price cap is increased again from April.

The Prime Minister also confirmed a controversial hike to national insurance over the weekend, despite reports he was "wobbling" over the policy.

In an article in the Sunday Times in which Mr Johnson and Chancellor Rishi Sunak claimed they were "tax-cutting Conservatives", the pair made a firm commitment to go ahead with the 1.25 percentage point increase, designed to tackle the Covid-induced NHS backlog and reform social care.

LBC's Camilla Tominey said she was "incensed" at the decision, questioning why national insurance was being put up by a Government who recently wrote off £4.3 billion in fraudulent Covid loans.

'Incensed' Camilla Tominey hits out at NI increase

New research suggests the average British household will pay more than £1million in tax in their lifetime.

The TaxPayers’ Alliance said paying around £1.1million in tax would mean having to work for 18 years just to pay it off.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: "With the tax burden at a 70-year high, typical families are now tax millionaires.

"Taxpayers already toiling half their working lives just to pay off the taxman cannot be asked to endure any further crippling tax hikes. Planned rises, like the national insurance hikes, must be scrapped."

Former Cabinet ministers have accused the Chancellor of being the “driving” force behind the £12billion a year tax raid.

Sir John Redwood told The Telegraph: “I think this was a Sunak imposition. It reads like Sunak rather than Johnson. Sunak is doing the exact opposite of what [Margaret Thatcher] was trying to do, so I don’t know why he was trying to invoke her.”

Robert Halfon and Mel Stride, Tory chairmen of the Commons Education and Treasury committees, said they feared voters would punish the Conservatives if they were unable to find a way to bring down household bills.

All of this has taken place against a backdrop of growing disquiet in the Tory party stemming from allegations of lockdown-breaching parties in Downing Street over the course of the pandemic - including a birthday party for the PM, and two leaving parties held hours before the Queen mourned Prince Philip alone at his funeral.

Ms Gray's report into the parties has been in the works for weeks, with new allegations and an announcement of a Met Police investigation pushing its publication date back.

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But it is thought the report could now be published this week, after Ms Gray reportedly made the decision to release a redacted version at the request of the Met instead of waiting for their investigation to conclude.

With some MPs reportedly waiting to see the report before deciding whether to support the Prime Minister or call for him to resign, the stakes for Mr Johnson are high.

Boris Johnson is 'the worst Prime Minister in the last 100 years'.

There are also questions over how much of the report is going to be published.

Whilst the Met have asked Ms Gray to make "minimal" references to the allegations they are investigating, Liberal Democrat leader Sir Ed Davey said it would be a "Whitehall whitewash" to not publish the full report, saying a redacted version would be "not worth the paper it is written on".

Meanwhile, SNP Westminster leader Ian Blackford MP said: "No-one will accept a Westminster cover-up.

"If the UK Government refuses to publish the full unredacted report it will prove, yet again, that Westminster is utterly corrupt and broken beyond repair.

"It won't save Boris Johnson's skin. It will only add to the calls for him to go."