A worrying story in today's FT reports that the 185 top wealth-creating companies in the UK paid 12 per cent of the added value they created in taxes last year, compared with 6 per cent in Germany and 8 per cent in France and Switzerland. This finding comes from the annual value-added scoreboard, published by the Department for Innovation, Universities and Skills.
The reason? As the FT reports:
"The Treasury says the UK has the lowest headline rate of corporation tax in the G7, but other countries often offer more generous tax breaks that in practice mean companies pay lower rates."
The answer is not to expand corporate tax breaks, such as complex R&D tax credits, but to lower rates. The CBI has called for the main corporation tax rate to be reduced from 28 per cent to 18 per cent over the next eight years. Given the number of UK companies moving headquarters overseas, this is now an urgent priority.