City of London Corporation will criticise the government’s taxation of the City in a report published today saying the current tax regime is damaging to London’s competitiveness and that rival countries are introducing favourable tax measures to attract internationally mobile staff.
The Corporation’s report says the huge number of recent changes to the tax system as well as those on the horizon, gives the appearance of a lack of fiscal and regulatory coordination.
The last three years have seen the introduction of several unexpected “tax events” such as the bonus tax, the bank levy, the increase in the top rate of income tax to 50 per cent, and a variety of other changes increasing uncertainty, the report will say.
In 2009 the City contributed £66bn in tax, it employed over 300,000 and accounted for 10 per cent of GDP.
The Corporation calls for greater consultation with government over taxation, while also accusing HRMC tax teams of being “unnecessarily adversarial”.
Stuart Fraser, policy chairman at the City of London Corporation said the lack of predictability in UK tax policy was “having a severe impact on perceptions of those who make the decisions on new investment in global financial services which remain critical for the success of the UK”.
He said the deteriorating position on tax certainty was a key issue for potential City investors in deciding whether to do business in London.
?Fraser added: “While the scale of overall tax burden is a key consideration, it is clear from this report that our top priority must be to restore the perception of predictability and certainty that has for so long underpinned the UK tax regime.”