THE BUSINESS TAX regime should be scrapped and replaced with a “lowish” tax on distributed income, according to City AM editor Allister Heath.
Writing in the Telegraph, Heath calls the current system of business taxation “mad and indefensible”, with corporation tax being particularly unfair due to the offsets that some companies can make against their profits.
His comments come in the wake of multinationals’ appearance in front of the Public Accounts Committee, including Starbucks (pictured), over concerns that they use complex structures and techniques to avoid tax.
“The result is an incoherent, nightmarish tax that is clearly not fit for purpose and increasingly regular show trials, where legislators berate companies for following their own legislation but are unable to suggest any sensible reforms,” said Heath.
Instead, a levy on income distributed to investors, which would include dividends, share buy-backs and interest payments, should replace the current business tax regime.
“This new levy would capture and tax just once all income generated from UK-based economic activity, dramatically reducing avoidance as well as the present double, triple or even quadruple taxation,” said Heath.
“Cash flows to investors from UK-generated activity would be taxed, not ‘profits’, so incentives to manipulate would disappear.”
Committee expresses concern about costs to businesses and April 2018 implementation date
Andrew Tyrie airs views on the Finance Bill, 'Making Tax Policy Better' report, and Brexit
Top 25 firm HW Fisher & Co has acquired London firm Rhodes & Rhodes
Top Ten firm RSM has appointed Nick Blundell as its head of corporate tax in Birmingham