CBI warns over raising corporate taxes

Michael Harrison

Sir Colin Marshall, president of the CBI, issued a thinly-veiled threat to the new Chancellor last night not to increase corporate taxes in his first Budget.

There is widespread speculation that Mr Brown will take the opportunity to raise corporation tax and cut the tax credits that institutions enjoy on dividend payments.

This would have the short term effect of reducing the amount of advance corporation tax paid by companies. But in the long term, it would increase their cost of capital and might force them to top up their pension schemes from company profits.

But Sir Colin told the annual dinner of the CBI in London last night: "The level of business investment does need to be stepped up but that depends on having economic and fiscal policies which allow commerce and industry not just to build profits but also to retain them. Today's profits are tomorrow's investment."

The CBI chief also cautioned the Government against upsetting the economy and criticised it over the windfall tax and its support for the Social Chapter.

But Sir Colin said he was encouraged by Labour's attitude towards Europe and its promise of co-operation and partnership with business. "The turn of events on 1 May has given us a fresh start in Europe. You could tell that something was stirring from the way Britain won the Eurovision Song Contest for the first time in many years, on Labour's second day in office," Sir Colin joked with the audience of 1,500 business leaders.

He said business looked forward to "a close working partnership of a kind not possible with previous Labour administrations. For us this is very much a case of New Labour- new experience."

Earlier the Chancellor had spelt out how the Government intended to take its partnership with industry forward. He confirmed that Sir David Simon, the former chairman of BP who has been made Minister for European Trade and Competitiveness, will chair a working group when Britain takes over the presidency of the EU next January, examining how Britain will work to complete the single market and promote flexible labour markets across Europe. The CBI will be represented on the group.

This follows a number of other initiatives to bring senior businessmen into Labour's new partnership. Martin Taylor, chief executive of Barclays Bank, has been appointed to chair the working group on reform of the tax and benefit system, while Malcolm Bates, former deputy managing director of GEC and now chairman of the Pearl insurance group, is conducting a review of the Private Finance Initiative.

Mr Brown also outlined his vision for a new University of Industry, which would operate as a public-private partnership providing lifelong learning for everyone through the home, the workplace and the community. "It will do for workplace education in the 1990s what the Open University did for second chance university education from the 1960s onwards," the Chancellor said.

He also pledged that Britain would play a leading role in shaping Europe's future. The idea that Europe could revert to a free trade area as in the 1950s was an illusion, he said. Whereas the debate over economic and monetary union had been "hijacked by extremists - dogma competing to be heard above prejudice" it would henceforth be based on a well-informed decisions about what EMU meant for Britain.

PROMOTED VIDEO
News
video
Life and Style
tech
Sport
Jodie Stimpson crosses the finishing line to win gold in the women's triathlon
Commonwealth games
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Arts and Entertainment
Jamie Dornan stars as Christian Grey in the Fifty Shades of Grey movie
filmFirst look at Jamie Dornan in Fifty Shades of Grey trailor
Sport
Shinji Kagawa and Reece James celebrate after the latter scores in Manchester United's 7-0 victory over LA Galaxy
football
Life and Style
Phillips Idowu, Stella McCartney and Jessica Ennis
fashionMcCartney to continue designing Team GB Olympics kit until 2016
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Farah returns to the track with something to prove
Commonwealth games
Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Market Administrator (1st line Support, Bloomberg, Reuters)

Negotiable: Harrington Starr: Market Administrator (1st line Support, Bloomber...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game