CBI calls for major overhaul of business tax system

Tax cut could boost revenue by £15bn a year. City's confidence in Chancellor plummets

The Confederation of British Industry has stepped up pressure from business on the Chancellor ahead of his first Budget by calling for a major overhaul of corporate tax.

The CBI's Tax Task Force says in a report today that rising taxes and globalisation mean that the UK has lost the advantages it had gained from cuts to corporation tax in the 1980s and late1990s. The panel of tax experts recommends a cut in the headline rate of corporate tax from 28 per cent to 18 per cent within eight years.

The Task Force, chaired by Charles Alexander, the chairman of GE Capital Europe, said the cut would cost the Exchequer between £300m and £4.2bn in each of the first seven years. But it calculated that Government revenues would be boosted by an average of £15.6bn annually from years eight to 12. The CBI also recommended simplification of company taxation, scrapping the current system that requires businesses to maintain two sets of books.

Following controversial decisions on capital gains tax and the treatment of overseas income for non-domiciled residents, the report called for a "no-surprises" legislative process with proper consultation and a "non-political" tax law commission to monitor tax law.

Richard Lambert, the director general of the CBI, said: "[The Government] needs to have the confidence to permit a serious, non-political dialogue about where the business tax regime should be heading, what it needs to achieve, and what we want it to look like in 10 years' time.

"A clear Government road map should follow, setting out the route to reform so business can plan with certainty."

The report said that a country's tax system plays a greater part in a company's decision about where to base itself or invest because businesses are now more global and mobile. The number of multinational companies has doubled to about 77,000 since 1990 and technology has made it easier for small companies to go global, it said.

The CBI was supported by a report from the accountancy firm Ernst & Young, which said Britain was in danger of being left behind as countries such as China, the Czech Republic and Germany cut their rate of corporation tax. As a place for investment, the UK has fallen to sixth from fourth in 2004 as India and Russia have overtaken it and Poland has drawn level, the survey said.

But the Trades Union Congress opposes the CBI proposals, saying companies would be taxed at a lower rate than individuals. Brendan Barber, TUC general secretary, said: "The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax. If its lobbying was to succeed it would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning Government commitments on child poverty."

The Chancellor, Alistair Darling, is under fire from the business lobby for his proposals to tax non-doms. After watering down the proposals earlier this year, he is set to announce further concessions, including a revision to the criterion for non-residents spending a day in the UK, where a day is counted if the person spends midnight in Britain, and a doubling of the limit to £2,000 for unremitted income allowed for tax purposes. The change will make it less likely that lower-income non-doms such as Polish plumbers would be caught by the new rules.

There is also likely to be relief for United States citizen non-doms with the announcement of an agreement with the US authorities so that the £30,000 charge in the UK will be allowable against their US tax bills.

Further pressure will be heaped on the Chancellor ahead of Wednesday's budget by a survey that shows City confidence in his stewardship plummeting. The Cantos City Panel survey shows that eight out of 10 City investors and managers do not think Mr Darling should stay in his post because of his handling of capital gains tax, non-doms and the Northern Rock affair.

The survey says that 59 per cent of respondents believed Mr Darling will be out of his job in the next 12 months.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
The two faces revealed by the ultraviolet light
newsScholars left shaken after shining ultraviolet light on 500-year-old Welsh manuscript
News
Rosamund Pike played Bond girld Miranda Frost, who died in Die Another Day (PA)
news
Arts and Entertainment
books
News
newsHow do you get your party leader to embrace a message and then stick to it? With people like this
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat