CBI Calls For £2 Billion In Business Tax Cuts

by Caroline Maxwell, Tax-News.com, London

09 April 2002

Following calls from small business groups for simplification of the corporate tax regime in the United Kingdom, the Confederation of British Industry (CBI) has asked the Chancellor for around £2 billion in tax cuts in order to 'reverse the rise in business taxes due to legislative changes since 1997'.

In its Budget submission, published yesterday, the CBI estimates that since Labour came to power business taxes have risen by £29 billion, and claims that at 13.2% of gross domestic product, the tax burden on UK companies is prohibitively high compared to trading partners such as the US, Ireland, and Germany.

CBI Director-General, Digby Jones, explained the reasoning behind the Confederation's demands:

'The increasing tax burden is eating into the ability of firms to fund expansion, create wealth and sustain more and better-paid jobs. The government must begin rolling back these costs or end up paying a high price,' he warned, adding that: 'Business is so globally mobile and the UK must maintain its position as the international location of choice. We need an increasingly competitive tax regime to attract and retain the companies of the future.'

Although the CBI has praised Gordon Brown for the pro-business initiatives already announced, it has stressed that many other changes are necessary in order to ensure that the country can compete effectively in the international arena.

Measures requested by the CBI as part of the £2 billion tax cut package include:

- A 'meaningful' tax credit for research and development

- A tax credit to help small firms train employees

- An extension of the discount eligibility criteria on the Climate Change Levy

- A reduction in stamp duty on business property

- Measures to resolve problems compared with international competitors, such as a VAT reduction on tourist accommodation and a review of the impact of stamp duty on share transactions.

The CBI chief concluded by observing that: 'It is wrong to see raising business taxes as a less painful alternative to politically unpopular individual tax increases. After tax profits are inextricably linked with the ability to pay good wages, offer competitive prices and invest for the future.'

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