Shadow chancellor warns public finances will continue to suffer as tax receipts from UK's biggest companies fall
The decline in corporate tax paid by the UK’s biggest companies could become
much worse, according to Liberal Democrat shadow chancellor Vince Cable.
His remarks came in response to a survey by PricewaterhouseCoopers
commissioned by the Hundred Group of Finance Directors which shows the absolute
level of total taxes paid by the group fell 12.4% year-on-year to 31 March 2008.
The survey cited a decline in corporate profits and changes to the phasing of
tax payments by energy companies for the plummet.
Cable said while the decline is to be expected in a recession, the figure
reflected in the survey ‘is quite mild given the massive collapse of profits in
many sectors of the British economy and I fear there is worse to come’.
The survey shows Britain’s largest companies paid £11bn of the government’s
corporate tax take in the year to 31 March 2008, which equates to almost a
quarter (23.8%) of total corporate tax receipts.
Richard Murphy, tax campaigner at the Tax Justice Network, said the findings
were unsurprising ‘except that these companies continue to pay so little’ tax
compared to rest of the private sector.
‘They should be paying dividends and should be aiming to retain profits and
what are we seeing here? They’re only paying a quarter of total [corporate]
tax,’ he said.
According to Ashley Almanza, chairman of the Hundred Group of Finance
Directors and group finance officer of BG Group, the survey ‘once again shows
the extent to which our largest companies support UK public finances through the
payment and the collection of taxes on behalf of the government’.
The data was compiled from 83 of the Hundred Group members. Survey
respondents said they expected their tax contribution to fall again in 2009.