Lord Saatchi will today plot out the details of his proposal to axe corporation tax for smaller businesses – a move he claims would foster growth while cutting the deficit faster than expected.
The advertising magnate’s report, published by Centre for Policy Studies, points out that 90 per cent of all UK companies have fewer than 50 employees, and the average firm has just five. The report claims that abolishing corporation tax for these firms and capital gains tax for their investors will push GDP growth to 3.1 per cent by 2018-9, compared to official forecasts of 2.4 per cent expansion. Meanwhile, public sector net borrowing would fall by £2.8bn in that year, compared to the Office for Budget Responsibility’s prediction of a £1.1bn decline.
The policy would cost an initial £10.5bn from lower tax receipts, which Saatchi argues would be absorbed back into the companies to encourage smaller firms to take on the big businesses that dominate many British industries.
Corporation tax raised £43.8bn in 2011-12, but firms on the small profits rate, estimated by the CPS to make up 91.3 per cent of companies, brought in just £8bn.
Saatchi, who also chairs the CPS, will today present his case to a conference held in honour of Mar-garet Thatcher.