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Rishi Sunak from a coalition of Conservative MPs is facing a rebellion over the upcoming corporation tax rise in April.
Leaders of several Tory backbench factions have written to the prime minister to urge him to “abandon” his plan to raise tax from 19 to 25 per cent ahead of the March budget.
Liz Truss backers Simon Clarke, chairman of the tax-cutting Conservative Growth Group (CGG), Sir Jake Berry, founder of the Northern Research Group (NRG) and Mark Francois, chairman of the European Research Group (ERG) called for a rethink on them. .
Greg Smith and John Redwood, leaders of the Thatcherite, Conservative Way Forward and No Turning Back groups also signed the letter, warning that a tax rise could hit investment and jobs.
The letter said: “We are writing to you to reconsider the government’s plans to raise corporation tax from 19 per cent to 25 per cent in April this year.”
He added: “If the increase goes ahead, it will lead to the loss of potential new jobs and higher national output and undermine your admirable ambition to turn Britain into a ‘science superpower’. It will be hard hitting to level hope.”
The faction’s membership is around 150 Tory MPs, signaling a major backlash over the March budget ahead as Chancellor Jeremy Hunt continues to rule out tax cuts until later in the year.
Business leaders such as Wetherspoons founder Tim Martin and hotelier Sir Rocco Forte also signed the letter supporting a U-turn on the rise in corporation tax.
The group warned that AstraZeneca’s decision to relocate its main drug production facility to Ireland – citing increased taxes – could be “taking into account what may come”.
He added: “Many, like AstraZeneca, will relocate future investment beyond our shores. Fewer people will want to establish themselves here.”
Ms Truss’s allies will present a wider blueprint for tax cuts to Mr Hunt ahead of his budget in March, in a move that highlights Tory divisions over the economy.
Mr Hunt has warned that the state of public finances means significant tax cuts are unlikely as he aims to reduce inflation.
The Conservative Growth Group (CGG) – launched last month around 20 MPs who supported the low tax, low regulation policies promised by Ms Truss.
But the group is “gathering strength”, with one source claiming that more than 50 MPs are now on board, which would be enough to defeat the government.
Ms Truss said she wanted to “be part of a pro-growth agenda” and wanted to build a “strong intellectual base”.
In an interview with The Spectators earlier this month she largely blamed Whitehall officials for the market turmoil – but admitted the botched plan to cut the 45p top tax rate for the richest earners was a “bridge too far”. quit
Former chancellor Kwasi Kwarteng has said he regrets his short tenure as chancellor – but claimed the “general direction” of his mini-budget which was collapsing in the economy was “correct”.
Despite sinking the value of the pound in the autumn with unfunded tax cuts, Mr Kwarteng said his political beliefs had not changed since he was sacked.
“I don’t think you’ll get away with high taxes,” he told TalkTV in his first interview since Ms Truss took over shortly before she collapsed.
