POLITICIANS should target tax avoidance by getting rid of legal loopholes, not browbeating firms into paying more, the Institute of Directors (IoD) said this morning.
“It is very frustrating for many companies who pay large tax bills that some multinationals are able to avoid doing so,” said IoD boss Simon Walker. “The solution must be simplifying the tax system, not simply hectoring from Westminster.
“If these firms are immoral to take advantage of tax loopholes, then politicians are surely immoral for creating the loopholes in the first place.”
This came in tandem with a 10 point list of policies and initiatives that the business group said the chancellor ought to consider for his Autumn Statement tomorrow.
The government should keep to its “mild” programme of fiscal consolidation, the group said, but rebalance spending towards infrastructure products like speeding up broadband.
As well as boosting broadband, the government should commit to following the recommendations of the Davies Commission on airport capacity, when it reports, the directors’ group demanded, claiming that Heathrow is “already full”.
And while “going green is vitally important” the UK needs a cheaper, more consistent environmental policy, the IoD said. It pointed to official statistics showing that British policy will add £28 to the cost of a megawatt hour, compared to £17 in Germany, £10 in China and nothing in the US.
Four of its recommendations concerned tax: it called for a more streamlined tax system overall, with a 30 per cent flat income tax rate, a £10,000 personal allowance, an end to capital gains tax, and corporation tax slashed to 15 per cent. A freeze in fuel duty and air passenger duty is also high on the IoD’s wishlist, and it wants the shale gas industry to be supported with a generous field allowance and a supplementary charge significantly lower than the current 62 per cent.