CORPORATION tax should be cut to 18 per cent in order to give a much-needed boost to the UK’s global competitiveness, the Confederation of British Industry (CBI) will demand today.
Britain’s attractiveness plummeted between 2000 and 2010, the CBI said.
The clock is ticking on the government to halt the decline and prevent businesses from departing these shores, CBI chief John Cridland said.
Levels of personal tax, business tax, and excessive regulations have hit the UK’s appeal as a place to do business, according to a CBI survey.
A negative balance of 84 per cent of senior FTSE leaders cited personal tax levels as harming the UK’s attractiveness since 2000, the survey revealed.
“The 50p tax rate on earnings over £150,000 is seen as a critical blocker on both attracting internationally mobile staff to the UK, and keeping top UK talent here,” the CBI claimed.
The government should reduce the 50p rate “as soon as public finances allow”, said Cridland, who praised the review into the amount of revenue it raises for the exchequer.
An independent study by the Adam Smith Institute has found that the higher rate causes tax revenues to fall, as business moves elsewhere.
Reversing the UK’s growing regulatory burden is more difficult, Cridland said, comparing the task to “turning around a tanker”.
“One company told us how it had complied with disability regulations by installing an access ramp to its premises,” the CBI’s report says, “only to be fined by another government body and told to take it away again because it was a listed building.”
Business secretary Vince Cable responded to the report by defending the UK’s attractiveness to investors.
“The UK inward investment regime is amongst the most welcoming in the world and remains one of the top three recipients of foreign direct investment in the world,” Cable said.
THE CLOCK IS TICKING | THE GOVERNMENT URGENTLY NEEDS TO PROVE THAT BRITAIN IS OPEN FOR BUSINESS, INDUSTRY LEADERS ARGUE
DAVID SPROXTON, CO-FOUNDER, AARDMAN ANIMATIONS
“Delivering bandwidth at a truly industrial scale is a truly essential ingredient for driving creative industries forward, and ensuring the UK isn’t left behind.”
JOHN CRIDLAND, DIRECTOR GENERAL, CONFEDERATION OF BRITISH INDUSTRY
“Many business leaders are telling us that the UK no longer holds the same attraction it once did, and are unsure whether they need to be here at all.”
LUCY ARMSTRONG, CHIEF EXECUTIVE OFFICER, THE ALCHEMISTS
“Smaller firms need to be able to access both short and long term finance. Many firms have shown good relationships with the banks are still possible today.”
IAN POWELL, CHAIRMAN AND SENIOR PARTNER, PRICEWATERHOUSECOOPERS
“We need to create a regulatory and fiscal environment that gives global business confidence to back the UK as the place for major investments.”
ANDREAS GOSS, CHIEF EXECUTIVE, SIEMENS UK
“A serious risk is the lack of skills in engineering and science, vital for the innovation needed to be competitive in a global market. Plus, the 50p tax rate is very high.”
ROBERT HIGGINBOTHAM, CEO EUROPE, FIDELITY INTERNATIONAL
“A marginal tax rate of 62 per cent for our most mobile employees, including NI, does nothing to encourage enterprise or retain expertise and skills.”
BRITAIN’S PLACE IN THE WORLD
Foreign investment in the UK fell from $186.4bn (£114.6bn) in 2007 to $45.7bn in 2009, as the recession took its toll.
Between eight per cent and 12 per cent of UK companies have not yet decided where their primary location will be in five years, a CBI and Deloitte survey found.
The UK was ranked 89th out of 139 by the World Economic Forum for having the biggest regulatory burden on business, on a par with Nigeria.
In maths education rankings, the UK lags behind France, Germany, the Netherlands, Japan and many other peer countries.
In science, the UK ranks below Germany, the Netherlands, Korea and Japan, yet ahead of some other peer countries, such as France and the US.
The UK’s top rate of income tax is higher than in France, Germany, the US, Brazil, Switzerland and many other countries.
Of 16 measures of attractiveness to business, the UK fell back in 11 of these between the years 2000 and 2010 including personal tax, business tax and regulation.
The internet, if taken as a sector of the economy, would now be a larger contributor to GDP than construction, education and transport.