James Dyson is wrong to say the government has ‘piled tax’ upon businesses

It’s just what the business lobby needed as the debate over the government’s planned tax rises heats up: a polarising Brexiteer billionaire who shifted his corporate HQ to Singapore sticking his oar in.

Yes, Sir James Dyson is back in the news.

In a letter to chancellor Jeremy Hunt – seen by The Sun – the entrepreneur and engineering whizz has warned of the “unintended consequences” of hiking corporation tax from 19p to 25p and of bringing in a new global levy on multinationals (something agreed on by the Organisation for Economic Co-operation and Development (OECD) as well).

“The government has done nothing but pile tax upon tax on to British companies,” he has said. “Is it any wonder that the economy is teetering on recession, or that companies like AstraZeneca are deciding to take their investment elsewhere?”

The latter was a reference to the pharma group’s decision to build a $360m (£300m) “state-of-the-art” manufacturing plant in Ireland rather than in the northwest of England near its existing facilities in Warrington and Speke.

Ireland won the prize because of the “discouraging” UK tax rate. It wasn’t solely because of the corporation tax hike, which was actually instituted by Rishi Sunak and is due to come into force next month unless Hunt chooses to spring a surprise in his budget.

The entire pharmaceutical industry is grousing about the current Voluntary Scheme for Branded Medicines Pricing and Access under which the NHS has been granted rebates. They kick in when drug purchases go above a certain level and have ballooned as a result of the post-Covid pandemic prescription boom.

Astra’s decision has become something of a cause célèbre. The government has made great play of the UK’s plans to become a life sciences superpower. The UK group’s decision has stoked fears of them ending up as more of a super flop.

Sir James is also unhappy about a 15 per cent tax rate for subsidiaries of large UK multinationals which will be enacted from the end of 2023, as part of a multinational OECD agreement.

So, is Sir James right? Well, no. The government has done “nothing but pile taxes” on business? Really? Remember the furlough scheme during the pandemic, which paid workers’ wages and saved firms from expensive redundancy programmes? It meant they were able to seamlessly reinstate their workers when it was practicable to do so. That was no small thing. And it cost billions of pounds.

The government then pumped billions more into helping companies out with their energy bills after the surge caused by Russia’s invasion of Ukraine, prices which have lately eased somewhat.

Then there was the “super deduction” dreamed up by Rishi Sunak to encourage business investment, which allows firms to claim 130 per cent of the tax back on qualifying schemes. Another pricey concession – albeit one that appears to have worked to the country’s benefit.

In light of all that, Sir James, a man with an estimated £23bn fortune, looks rather like a spoiled child to me. That’s before we move on to the Brexit he loudly backed and which plunged a dagger into trade with Europe – leaving businesses grappling with enormous extra costs and strangled by red tape. Is Dyson proposing to contribute to a Brexit help fund? I would suggest not.

That said, the tax hit faced by UK businesses is substantial at a time when the British economy is hardly in the best of health and the global one isn’t exactly singing either.

The chancellor keeps talking about “tough decisions” but he has a lot more fiscal firepower than he had a few months ago. The energy support schemes have proved far less costly than initial estimates suggested, unemployment looks set to peak at a lower level than feared, the economy is in better shape than forecasters thought it would be.

Perhaps he could start by unveiling a replacement for the super deduction, which would be well received. Even if it is set at 50 per cent, with a goal of increasing it to 100 when the public finances allow. A targeted tax break aimed at stimulating investment would be a worthwhile concession. Britain is in a tough spot and it isn’t just the life sciences sector, or even tax. Homegrown tech companies are shunning the City. Other firms are getting restive. Brexit still hangs like a cloud over everything, even if Sunak has found a compromise over the Northern Ireland protocol.

These issues need to be addressed. The chancellor needn’t listen to Sir James. But it is also true that setting taxes too high can do more harm than good and there are more moderate voices out there with ideas he ought to listen to.