Companies face likely tax hike
Corporation tax may have to be raised again to cover the promised growth in public spending.
The revelations come after official forecasts for corporation tax revenues were queried by top economists in relation to the outlook for company profits following the end of the bull market.
Speaking to the Financial Times, Martin Weale, director of the National Institute for Economic and Social Research, said the Treasury’s projections were based on a cyclical recovery in corporation tax revenues which to him seem ‘optimistic’.
In the last budget, Gordon Brown said corporation tax revenues would rise from 2.8% to 3.5% of national income by 2006-07, about £7bn.