Chancellor Alistair Darling must put an end to “ill-considered” tax measures and create greater tax certainty to enable British businesses to compete internationally and encourage investment from overseas, according to the Association of British Insurers (ABI).
A report published today puts forward a series of proposals that it thinks will help see Britain through the credit crisis and which the Chancellor must address in his prebudget report later this year. “The Pre-Budget report in the autumn is building up to be one of the most crucial in modern times,” said ABI director general Stephen Haddrill.
“The insurance industry plays a key role in a number of policy areas as well as being a major employer and third highest payer of corporation tax. As such we are uniquely placed to work with the Government to address risks it will find increasingly difficult to bear,” he added.
The group wants the government to lower corporate tax rates, to establish “clear protocols” for consultation on tax changes, and encourage UK domiciled companies to bring profits made offshore back to the UK.
“In the last decade more multinational companies have left the UK than any other EU country,” the report said.
The government is currently consulting with businesses on a plan to change the way foreign profits are taxed. Lack of clarity over its original proposal, and fears that companies that rely on extensive intellectual property could suffer, sparked outrage from multinationals. A number, including Shire and United Business Media, announced they would domicile their headquarters overseas for tax purposes.
A hike in capital gains tax and a new levy on non-doms living in Britain also triggered fury from nearly all corners of the City, following which many entrepreneurs and wealthy foreigners threatened to leave the UK. The ABI is particularly concerned that multinational insurance companies are relocating to the tax haven of Bermuda, which has become the third largest insurance centre after London and New York.
It also wants Darling to encourage consumers to save, and to help see them through difficult times by encouraging financial literacy through better guidance and a larger tax free savings allowance.
The government should also remove tax disincentives that cost employers who invest in the health of their workers.