London business calls for clear and transparent tax framework (7 June 2010)June 7, 2010
London businesses will today call upon the Government to develop a clear and transparent tax framework as it gears up for the Budget later this month.
The call is made in a new report, “A Balanced Tax Policy: Supporting UK Growth”, which outlines what steps should be taken to ensure that London and the UK remain competitive as the Government prepares to set out its plans to reduce the fiscal deficit.
The UK has traditionally been viewed as having a business supportive tax regime, but recent changes like the non-doms tax, 50% top rate tax, and the bank bonus tax, have meant that businesses are thinking twice about locating in London.
The report outlines a number of key considerations, including the need for:
– a constructive and competitive tax regime built on fairness, due process and competitiveness
– restoration of the UK’s reputation for having a predictable and business supportive tax regime so that businesses continue to invest and locate in London
– greater engagement with business when setting policy and a drive towards a simpler tax system
– a reduction of the top rate tax to 40% by the end of parliament – a higher rate being bad for growth and bad for the Exchequer. The Government should also ask the Office for Budget Responsibility to assess the yield from the 50% rate compared with the 40%
– further tax rises from broad-based taxes. To protect competitiveness this should be from indirect tax, like VAT.
John Dickie, Director or Strategy and Policy at London First, said:
“The UK has traditionally been viewed as having a business supportive tax regime, but recent changes which came from nowhere – like the non-doms tax, new 50% top rate income tax and the bankers’ bonus tax – have put this reputation under threat. Business values certainty. If the UK is to compete successfully in a global market the Government needs to provide a transparent, consistent and predictable tax regime.
“In tackling the deficit we need a spending:tax ratio of roughly 80:20 and we need to look to taxes which will have the minimal effect on competitiveness – like VAT. We also need to look again at the new top rate of income tax. The 50% rate is bad for growth and bad for the Exchequer – the independent Institute for Fiscal Studies estimates that 40% is the revenue maximising rate. A commitment to return to it at the end of the Parliament would give growth, business and the tax man a boost.”
Notes to Editors
The London First report, A balanced tax policy – Supporting UK growth, is available to download here
London First is a business membership organisation with a mission to make London the best city in the world in which to do business. London First undertakes this by mobilising the experience, expertise and enthusiasm of the private sector to develop practical solutions to the challenges facing London. London First also seeks to persuade central and London government to make the investments that London needs in its infrastructure.
London First delivers its activities with the support of the capital’s major businesses in key sectors such as finance, professional services, property, ICT, creative industries, hospitality and retail. Membership also includes further education colleges and all of London’s universities. London First members represent over a quarter of London’s GDP.