Cut Corporation Tax to 18% to restore competitiveness, says CBI

April 19, 2011 7:31 PM

The Confederation of British Industry (CBI) has said British competitiveness has slumped between 2000 and 2010.

The big businesses club has said Corporation Tax should be slashed to 18 per cent to help stop Britain’s slide as upmarket chocolate mint maker Bendrick’s announced its Hampshire factory will close and production transferred to Germany (effective Corporation Tax rate 23.8 per cent compared to the UK’s 27.9). The CBI also criticised the 50p top rate of Income Tax as a barrier to inward investment and growth:
“The 50p tax rate on earnings over £150,000 is seen as a critical blocker on both attracting internationally mobile staff to the UK, and keeping top UK talent here.”

Business Secretary Vince Cable responded to the report talking up the British investment climate, despite the fact Britain’s effective rate is one of the highest out of 83 selected countries according to a Cato Institute report:
“The UK inward investment regime is amongst the most welcoming in the world”

[caption id="" align="alignright" width="240" caption="Could go faster..."][/caption]

Britain’s tax code is too long, the rates are too high, the detail is too complicated and the result is a faltering economic recovery. The Chancellor ought to have cut Corporation Tax harder, perhaps to the CBI’s figure of 18 per cent and should be tackling the complexity which people actually have to deal with in their tax affairs and which makes compliance expensive rather than boast about how the budget’s tax simplification measures the Government will follow through won’t actually make much difference to anyone because they’re redundant anyway.

We need a stronger, resilient economic recovery urgently and that means a simpler tax system with lower rates. Although the Government could and should cut it further and faster, a Corporation Tax cut to 18 per cent would be an excellent way to start.The Confederation of British Industry (CBI) has said British competitiveness has slumped between 2000 and 2010.

The big businesses club has said Corporation Tax should be slashed to 18 per cent to help stop Britain’s slide as upmarket chocolate mint maker Bendrick’s announced its Hampshire factory will close and production transferred to Germany (effective Corporation Tax rate 23.8 per cent compared to the UK’s 27.9). The CBI also criticised the 50p top rate of Income Tax as a barrier to inward investment and growth:
“The 50p tax rate on earnings over £150,000 is seen as a critical blocker on both attracting internationally mobile staff to the UK, and keeping top UK talent here.”

Business Secretary Vince Cable responded to the report talking up the British investment climate, despite the fact Britain’s effective rate is one of the highest out of 83 selected countries according to a Cato Institute report:
“The UK inward investment regime is amongst the most welcoming in the world”

[caption id="" align="alignright" width="240" caption="Could go faster..."][/caption]

Britain’s tax code is too long, the rates are too high, the detail is too complicated and the result is a faltering economic recovery. The Chancellor ought to have cut Corporation Tax harder, perhaps to the CBI’s figure of 18 per cent and should be tackling the complexity which people actually have to deal with in their tax affairs and which makes compliance expensive rather than boast about how the budget’s tax simplification measures the Government will follow through won’t actually make much difference to anyone because they’re redundant anyway.

We need a stronger, resilient economic recovery urgently and that means a simpler tax system with lower rates. Although the Government could and should cut it further and faster, a Corporation Tax cut to 18 per cent would be an excellent way to start.

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