There is, though, a case for another look at corporate taxation. A key national objective must be to improve the competitiveness of our trading sectors, the most important of which is manufacturing. British business invests relatively little as a share of national income, and there are often social benefits from investment that justify tax incentives.
The recent work from the Institute of Fiscal Studies suggests that the impact of the temporary increase in capital allowances from 25 per cent may have boosted investment by about 6.5 per cent compared with what it would otherwise have been. But it also suggests that a permanent change to a 40 per cent allowance would raise investment by about 5 per cent a year, an enticing gain.Reuse content