UK Expecting Surge In Company Tax Receipts

by Jason Gorringe, Tax-News.com, London

24 March 2005

UK Chancellor of the Exchequer Gordon Brown said yesterday that he is expecting corporate tax receipts to go up by 28% in the 2005/2006 financial year.

Giving evidence to a parliamentary budget committee, Brown said that his forecast was in line with actual profit growth at leading UK companies. He pointed out that profits at the UK's four largest oil companies rose more than 40% last year, while banks' profits rose 17%, and a sample of 40 non-financial companies showed profit growth of 23%.

"The idea that our companies are not profitable and our receipts are not likely to be higher is totally false," Brown said.

Brown also said that the new Stability and Growth Pact being discussed by EU Finance Ministers at a two-day summit this week would not stand in the way of the UK's adopting the euro, if any decision was made to do so. However, Brown said that the rules of the Pact remained unsatisfactory for countries with low debt levels and high investment needs, because public sector investment will be included in the measure of expenditure used to calculate the medium-term budget deficit, and no consideration will be given to the amount of debt currently owed by the government.

"That makes it difficult for a low debt country to run an investment program," Brown said. "There is no incentive to reduce debt, in fact all incentives work in the other way."

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