Tax is ‘Ball and Chain’ to Business
A report by the Confederation of British Industry has suggested that our current tax system is a burden to Business.
Ahead of Wednesday’s 2008 Budget, the CBI’s independent Tax Task Force, a group comprising of a dozen leading tax experts from some of the UK’s largest companies and smaller businesses, has released a report, the culmination of nine months work collating data to provide a vision for the UK’s tax system.
The report "UK business tax: a compelling case for change" suggests that the ever-increasing tax burden on Britain’s small firms has reached a "tipping point" and the current tax system is unsustainable, especially in light of the globalisation of business in recent years.
Rather than simply condemning the current system the report offers suggestions for improvement to the current regime and recommends:
- A genuinely simplified and improved tax system for SMEs – A small business corporation tax rate of 18% within 3 years, exemption from rules intended for big multinationals and a doubling of the SME investment allowance to £100,000.
- Tax calculated on existing company accounts – not the "two book" system.
- Better legislation and administration process – allowing for proper consultation over changes to the system, parliamentary scrutiny and transparency prior to budget announcements.
- An independent tax law commission – a non-political body that would review tax law and suggest improvements.
A Corporation Tax rate of 18% for all non-SMEs would be effective within 8 years. The study believes the cut to 18% would effectively "pay for itself" within this time-scale as the country eventually benefits from an increase in enterprise and economic activity.
The CBI states figures such as the World Economic Forum’s Global Competitiveness Index to back up its claims, indicating that the UK has slipped from 4th place in 1998 to 15th place in 2003 (but failing to recognise that the UK is 9th in 2007-2008 and was 2nd in 2006-2007)
The report puts Britain’s tax rate behind other European countries like Ireland, the Netherlands and Portugal and even goes into the number of pages on tax in the Finance Bill and Tolley’s Yellow Tax Book (up by a purported 4,000 pages to nearly 10,000 pages in total)
The crux of the matter though is summed up by the Director General of the CBI, Richard Lambert, when he said:
"The UK tax system cannot continue as a ball and chain round the ankle of British business, when it should be a springboard for encouraging growth and attracting investment."
Charles Alexander of the CBI’s Tax Task Force added:
"You don’t have to be a tax expert to work out that every penny spent on tax leaves less available for investment in jobs, research and development. So an uncompetitive tax system affects everyone."