Osborne seeks corporation tax cut
Shadow chancellor George Osborne has called on the government to cut corporation tax by 3p to help British competitiveness.
The Conservatives are advocating a reduction in the headline rate from 28p to 25p, but their overall package would not result in net revenue loss for the Treasury.
Instead the headline cut would be offset by an end to the credits system which the Tories claim is currently overcomplicating Britain’s taxation model.
Mr Osborne described the current rate of business tax, now the fourth-highest in Europe, as being a “millstone round the necks of British firms” and said there was a “compelling case” for the changes backed by his party.
“This will create a much simpler business tax system and a much lower tax rate,” he said.
“It will send a clear signal that Britain is open for business and it will be a real shot in the arm for British companies as they meet the challenge of competing in a global economy.”
Accountant Grant Thornton has backed the Tory figures, the party claims, which are based on those provided in the 2007 Budget. It says the reform could be implemented immediately and without any net cost to the Treasury.
The Tories are also calling on chancellor Alistair Darling not to introduce a “damaging” 2p rise in the small companies tax rate.
He added: “Small businesses are the lifeblood of a vibrant economy and a tax hike now would be a disaster.”
Revenue-neutral cuts are not an unusual tactic. Last year’s Budget, Gordon Brown’s last as chancellor, saw a similar reduction in the headline rate from 30p to 28p.
