CBI: Britain needs corporate tax cuts


CBI: Britain needs corporate tax cuts
British businesses believe the UK is a worse investment location than it was five years ago, a survey from the Confederation of British Industry (CBI) shows.

In all, 75 per cent of businesses questioned in the CBI survey believed that the corporate tax regime had worsened in the last five years, while two-thirds blamed the government's approach to tax and international competitiveness for the deterioration.

Difficult compliance demands and the increasing complexity of the British tax system were also blamed, leading the CBI's director general, Richard Lambert, to call on the government to alleviate some of the pressures facing British businesses.

"No-one expects a dramatic overnight shift - rolling back the tax burden, like turning an oil tanker, will take time," he said.

"However, business needs a clear signal that the UK is going to shift course, first by checking the trend to a more burdensome business tax regime, and then by moving back up the competitiveness league tables."

Mr Lambert warned that because shareholders, consumers and the workforce are all affected by the health of UK businesses, the impact of restrictive taxes would not just be felt by the big corporations.

"High business taxes are not a way of making 'fat cats' squeal. They are a burden carried by the whole of society," he added.

Opposition leaders have jumped to support the claims of the CBI survey. The shadow chancellor, George Osborne, said that the CBI's research was a "damning indictment" of chancellor Gordon Brown's tax regime, before claiming that the Conservative alternative would help foster a more effective business climate.

"[The] Conservatives have commissioned a detailed technical report to see whether we can radically simplify business taxes - removing complex reliefs in order to reduce rates. It is something that I hope to begin with my very first Conservative budget," he said.

But TUC general secretary Brendan Barber dismissed the CBI's claims, insisting that it was reasonable for companies to pay "fair taxes". He pointed out that countries like the US, Germany and Japan all had to pay higher tax rates than those forced on UK companies.

"Anyone calling for businesses to pay less tax needs to spell out which taxes should rise to compensate or which areas of government spending should be cut," Mr Barber said.

"Users of schools and hospitals would have every right to be angry if corporation tax cuts were to reduce the services upon which they rely."

Responding to the CBI's claims, a spokesperson from the Treasury said that the government had cut corporate taxes twice in the last nine years and was pro-actively attempting to find "better ways of engaging business".

"The government is not only looking at ways of reducing the taxation burden but also at ways of reducing the administrative burden as well," the spokesperson said.

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