Britain’s corporation tax must be reduced and government must offer firms incentives to encourage investment, Gordon Brown has been told.
Meeting with the chancellor to deliver its Budget submission, the British Chambers of Commerce (BCC) has asked Brown for solid reassurance that the tax burden on business will not be increased.
British firms are failing to compete with rivals in emerging markets overseas because tax and regulatory burdens are holding them back, BCC president Bill Midgley has said.
While many countries in the Organization for Economic Cooperation and Development (OECD) have lowered their tax rates in recent years, Midgley pointed out that the UK’s standard corporation tax rate of 30% has remained static. The country has dropped from having the 9th lowest tax rate to now having the 16th lowest.
British businesses as a result are paying 10% more than the average for the EU’s 10 new member states and 5% more than the average for the whole of the EU.
The BCC has asked Brown to announce targets and a corresponding timescale for reducing the administrative tax burden on business.
Midgley said that in OECD countries where the tax rate has been reduced, more companies have chosen to invest, and the majority of these nations have seen an increase in their total tax receipts
The BCC is also calling for the rules relating to National Insurance (NI) to be aligned with those that govern income tax and placing NI on a cumulative basis. Other wishes include R&D tax credits to cover IP expenditure, more funding for business support and a review of national minimum wage rates.
“We have very practical proposals,” Midgley said. “All are well within the government’s capability to deliver; indeed, some build on proposals already made by government.
“We hope the chancellor will use this opportunity to help our firms meet their global challenges head on.”
