The Centre for Policy Studies has urged the Prime Minister, David Cameron and the Chancellor, George Osborne, to cut corporation tax to as little as 10% because it’s the only source of a viable economic recovery.
During the budget last year, George Osborne pledged to cut the main rate of corporation tax to twenty-three percent from its current twenty-six percent by 2014; the lowest rate in the G7 group of leading economies.
However, a report by the think tank argues that the government needs to take a more drastic approach, reducing the corporation tax to twenty percent in this years budget.
The report states: “A cut in the rate to 20 per cent would be a quantum leap towards encouraging the enterprise economy which this country needs.
“It would be a wake-up call to business both domestic and international. It would also be a significant simplification of the tax system.”
The Centre for Policy Studies also says the tax cut is the only source of viable economic recovery since households and individuals are too indebted to expect consumers to lead a rescue of the economy.
Director of The Centre for Policy Studies, Tim Knox, said: “Profitable businesses are the only source of a viable economic recovery, the Chancellor should reduce the rate of corporation tax in the 2012 Budget — and also announce his intention to reduce it even further to 15 per cent or even 10 per cent once the appropriate anti-evasion measures are in place.
“The UK is facing the possibility of a double dip recession. Demand in the economy is weak. Business confidence is low. Politicians of all parties are looking for ways to encourage growth. Bold steps should be considered.”
The Treasury is expecting corporation tax to generate £43 billion in revenues this year, whilst the report estimates that reducing the tax to twenty percent would see the Treasury lose around £4 billion which would be offset by enhanced economic growth.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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