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CBI pressures Darling on tax cuts | |
(about 9 hours later) | |
Chancellor Alistair Darling is facing a demand from business to cut corporation tax, as he makes final preparations for his first Budget on Wednesday. | |
The Confederation of British Industry (CBI) has said that high taxes on business are damaging the UK economy. | |
However, dramatic tax cuts do not look likely given economic uncertainty and strained public finances. | |
Instead, Mr Darling is expected to deliver "a green Budget", with measures to cut carbon emissions. | |
He is also expected to announce help for people struggling to pay energy bills and raise the duty on alcohol. | |
Tax cut | |
Richard Lambert, head of the CBI, said a few years ago Britain had one of the most favourable corporate tax environments in the world but that has now deteriorated. | |
CORPORATION TAX RATES Italy 37.2%Germany 29.8%UK 28%Netherlands 25.5% | |
The CBI wants corporation tax cut from 28% to 18% by 2016 and a simpler system introduced. | |
However, unions say a cut in corporation tax would lead to tax hikes for "ordinary people". | |
The call comes as business confidence in the government has deteriorated in the wake of the Northern Rock scandal, changes to capital gains tax and amid plans to tax non-domiciles. | |
Energy | |
Mr Darling is expected to present a plan to control the tariffs paid by 3.8m electricity customers and 2.8m gas customers who use pre-payment meters, according to the Financial Times. | |
The measures are thought to be aimed at stopping energy firms making an alleged £400m in excess profits from the country's poorest consumers. | |
The chancellor is also expected to unveil measures aimed at cutting carbon emissions from cars and a move to increase biofuel use. | |
Weekend newspaper reports said the chancellor might introduce a levy on new, larger cars, such as people carriers, that could increase their price by £2,000. | |
Competitive edge | |
According to a CBI report, written by 12 leading tax experts, the UK has failed to match deep cuts made to corporation tax by nations like Italy and the Netherlands. | |
It says since 1993 the main rate of UK corporation tax has been reduced by 5% to 28%, but Germany has halved its tax rate to 29.8% and the Netherlands has sliced off 9.5%, to 25.5%. | It says since 1993 the main rate of UK corporation tax has been reduced by 5% to 28%, but Germany has halved its tax rate to 29.8% and the Netherlands has sliced off 9.5%, to 25.5%. |
That means that the UK has slipped from fourth to sixth place in the ranking of EU nations with the lowest corporation tax rates. | That means that the UK has slipped from fourth to sixth place in the ranking of EU nations with the lowest corporation tax rates. |
The Conservatives have also put pressure on the chancellor to cut business taxes. | The Conservatives have also put pressure on the chancellor to cut business taxes. |
Shadow chancellor George Osborne told the BBC the Tories planned to pay for cutting corporation tax to 25% by scrapping a number of business tax breaks. | Shadow chancellor George Osborne told the BBC the Tories planned to pay for cutting corporation tax to 25% by scrapping a number of business tax breaks. |
But TUC general secretary Brendan Barber said the chancellor should not listen to the CBI. | But TUC general secretary Brendan Barber said the chancellor should not listen to the CBI. |
"The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax," he said. | "The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax," he said. |
"If their lobbying was to succeed, it would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning government commitments on child poverty." |