TaxCorporate Tax‘Corporation tax cuts won’t work’

'Corporation tax cuts won't work'

Gordon Brown may need to find ways to help stimulate the economy, but cutting corporation tax is not the answer, according to finance directors.

Link: Last week’s Big Question

The latest Accountancy Age/Reed Accountancy Personnel Big Question survey showed nearly half of those FDs surveyed do not think cutting corporation tax will help the UK continue to grow economically.

In comparison with the 48% who disagreed with the suggestion, only 36% of respondents thought that such a move should be included in the chancellor’s pre-Budget report, expected in late November.

Many FDs thought the current rate was reasonable compared with other European nations and that other methods would be more effective in stimulating the economy.

One finance director summed up the feelings of many when he said: ‘I don’t believe that a cut in corporation tax would make a huge difference to the growth of the economy. I think there should be targeted tax incentives for investment, so that companies can invest in the future potential output of their business.’

Brian Beckett, FD at J Devine Plant Hire, said that corporation tax was ‘low enough as it is – reducing it further will have little effect’. He added that the increase in employers NI contributions will have a greater impact.

Some, however, feel a cut is long overdue. Peter Lancaster, FD at PPD, said: ‘It would go some way to giving back what he (Brown) has taken away in his previous stealth taxes.’

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