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No PBR corporate tax cut, FDs predict. By Dan Martin

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22nd Nov 2006
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Although a third of finance directors believe a cut in corporation tax is needed to boost UK competitiveness, less than a tenth predict Gordon Brown will announce such a reduction in his pre-budget report (PBR), new research reveals.

A poll by accountants BDO Stoy Hayward found that for many FDs, the chancellor has failed to deliver with half claiming his policies have actually had a negative impact on British business.

Adding to several recent claims that the UK's international competitiveness is being eroded as a result of too high corporation tax levels, 30% of respondents said a cut in the current rate is urgently needed.

Despite this demand however, only 6% were confident Brown will listen to their concerns and actually announce a cut in the pre-budget report on 6 December.

Just 8% believed Brown's reign as chancellor has had a very positive impact on UK plc, and when asked to look ahead, FDs were no more optimistic. Although Ed Balls was the clear choice for next Labour chancellor, few believed he would tackle key issues of concerns to UK business.

"It will be interesting to see if the chancellor listens to UK business and cuts the 30% rate of corporation tax," Stephen Herring, tax partner at BDO Stoy Hayward. "We consider a cut is now well overdue and the chancellor is in danger of leaving a legacy of both increasing tax complexity and the retaining of an uncompetitive corporation tax rate.

"His first budget in 1997 saw him rightly reduce corporation tax from 33%, and many will be hoping he will re-establish the UK’s competitive tax position, especially as corporate tax rates have been falling internationally."

On PBR predictions, the majority of FDs forecast rises in environmental taxation, although few expected a reciprocal reduction in other taxes. Almost a tenth predicted a clampdown on "benefits in kind" payments to employees such as higher taxes on company car provision.

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Richard Murphy
By Richard Murphy
29th Nov 2006 17:57

How do they define competitiveness?
How do they define an improvement?

Why don't they act more entrepreneurially themselves instead of complaining about the government?

Richard Murphy
http://www.taxresearch.org.uk/blog/.

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