Darling urged to reject "tax dodgers' charter"

Monday, 10 March 2008 12:00 AM

The Confederation of British Industry (CBI) has added its voice to the calls for a tax cut in this Wednesday's Budget, arguing the present rate of corporation tax is making the UK uncompetitive.

Following an "independent" assessment of corporation tax, which found the UK has slipped from fourth to sixth in a ranking of EU tax levels, the CBI called on Mr Darling to order a cut from 28 per cent to 18 per cent.

This follows the shadow chancellor's support at the weekend for a corporation tax rate of 25 per cent.

The CBI argues a lower rate of corporation tax would relieve the tax burden on businesses and make the UK more attractive for investors.

But unions have urged the chancellor to rebuff the calls, warning a corporation tax cut would affect "ordinary people" and harm public services.

The CBI's Tax Task Force, comprised of 12 leading tax experts, said the corporate tax system had become "unsustainable" in the long-term.

Head of the CBI Richard Lambert said the system was no longer fit for purpose and was making the UK look uncompetitive.

He argued: "An 18 per cent business rate within eight years would help restore the UK's low tax credentials. But a radical shake-up is also vital if clarity, certainty and simplicity are to be reintroduced to the system so firms can plan with confidence and make Britain their long-term home.

"We have all seen the to-ing and fro-ing over CGT and non-doms in recent months. Knee-jerk, retrospective change is no way to manage a tax system. "

But the TUC has urged Alistair Darling to rebuff the business industry's "special pleading".

General-secretary Brendan Barber said the report amounted to a "tax dodgers' charter".

He said: "The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax.

"If its lobbying was to succeed it would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning government commitments on child poverty.

"The CBI might as well hang a giant 'tax is for the little people' banner from its office windows."

Economic experts predict the chancellor will be unable to announce any sweeping take cuts, amid tight public finances and slower economic growth.

Instead Mr Darling is expected to announce a windfall tax for energy companies as well as further incentives to cut carbon emissions.

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