A former Conservative chancellor has urged the government to ditch corporation tax which he says has "had its day", weighing in on an increasingly heated row over tech giant Google's arrangement in the UK.
Lord Lawson, who was part of the Thatcher government from 1983 to 1989, said that the government should instead tax a company's sales.
"It is profoundly unsatisfactory that corporation tax has to be collected from large multinational corporations by a series of ad hoc compromise deals as we have once again seen with the Google affair," he told the Daily Telegraph.
"It is also grossly unfair on smaller businesses, who are unable to shift profits between tax jurisdictions and have to pay the full amount due to UK law."
It comes after Google agreed to hand over £130m to HMRC, settling claims covering a 10-year period. This includes years when Tony Blair and Gordon Brown were in Number 10.
Prime Minister David Cameron has been forced to defend the government's approach to collecting corporation, after Labour leader Jeremy Corbyn attacked the deal at Prime Minister’s Questions. Cameron in turn used the question to hit out at the opposition, saying Google’s disputed taxes “should have been collected under a Labour government”.
"I have long argued that in the modern world corporation tax has had its day as a major source of tax revenue. It needs to be a much lesser tax, bolstered by a tax on corporate sales," Lawson added.
"While multinationals can artificially shift profits to whatever tax jurisdictions they choose, sales are where they are, and can't be shifted."
"Instead of endless discussion at international conferences of one kind or another, the UK should take the lead in implementing this much-needed tax reform."
Peter Barron, a senior Google executive, is due to give the first public defence of Google's tax bill in the UK on the Andrew Marr Show on BBC1 tomorrow.