SLASHING the rate of corporation tax will stimulate the economy and make the UK a more attractive destination for businesses relative to other advanced economies, a report from the Centre for Policy Studies (CPS) argues today.
The government currently plans to cut the rate of corporation tax by one percentage point per year, taking it from the current standard rate of 26 per cent to 23 per cent by 2014. The rate stood at 52 per cent in 1982.
However, other countries have also reduced rates, with the OECD average falling from 48 per cent in 1982 to 26 per cent in 2010.
A cut in the UK’s rate would boost business confidence and competitivenesses at just the time firms need help, the CPS argues, promoting investment and so growth.
And the report suggests cutting tax will generate more revenues though greater economic activity. As the headline rate halved from 1982 to 2010, the share of GDP it gave to the government rose from two per cent to 2.8 per cent.