If, as expected, the Tories win the Crewe and Nantwitch by-election, Cameron will be claiming he’s the PM in waiting. Liberal leader Nick Clegg – who was a student Tory – will shore up Cameron’s “New” Conservatives in the event of a hung parliament.
Cameron hasn’t explained how cutting public expenditure squares with other commitments on health and military spending. I mean, selling schools and impoverishing benefit claimants will leave substantial ammounts of cash spare, but not enough to fund conflicts in the Middle East and a cut in income tax…
As the multinationals get uppity with the Treasury over plans to tax overseas profits – and as the by-election approaches – Cameron’s speech is timely for the Tories. It’s just as well for them that they will not be forming a government any time soon, because economic conditions are worsening…
For big business, those tax cuts could be coming sooner than two years and a Tory government. After all, they’ll be able to lobby for tax cuts directly:
Some of Britain’s biggest corporation tax payers are to advise the Government about new tax proposals.
The financial directors of oil giant BP, Britain’s biggest banking group HSBC and engine-maker Rolls-Royce were among those named as members of a “multinational tax forum”.
The 12-strong body, which is to be chaired by Financial Secretary Jane Kennedy, will discuss a series of potential tax system changes, including controversial proposals to tax intellectual property rights held overseas.
And the Jelly Chancellor will be doing even more pandering to the plutocrats:
Business leaders will tonight put the screws on the chancellor, Alistair Darling, with demands for a broad sweep of tax cuts after forcing a climbdown in a long-running battle over corporation tax reform.
Calls for a more business-friendly approach from ministers will be led by the CBI president, Martin Broughton, who will use his speech to the annual CBI dinner to accuse the government of increasing the cost and complexity of tax measures. Referring to strained relations between business and government after the battle over capital gains tax rule changes and the botched tax of non-doms, Broughton will call on Darling to resist making business the “fall guy” for the global credit crunch through higher taxes or more regulation.
The CBI has intensified calls for Britain to cut corporate taxes to prevent companies moving abroad. The government recently cut the headline rate of corporation tax to 28% in response to intense lobbying, but has indicated it will cut the tax further when the Treasury’s coffers are healthier.
It’s a bit rich of them to be complaining, though:
Some of Britain’s biggest listed companies, including several that have threatened to redomicile abroad, paid little or no corporation tax in Britain in 2007.
Research by The Times shows that FTSE-100 companies – Cadbury, Standard Chartered and British American Tobacco, which have a combined market capitalisation of £75 billion, employed almost 11,000 UK staff and generated more than £6 billion in global profits, – paid zero corporation tax in Britain last year.
Although there is no suggestion of impropriety, the research indicates that some of Britain’s biggest and best-known companies contribute startlingly little to the Exchequer in corporation tax. Most of the companies earn the bulk of their profits overseas, meaning that they also pay most or all of their taxes outside the UK, allowing them to offset these against domestic tax liabilities. In some cases, this allows them to pay no British corporation tax at all.
Other large UK-domiciled firms that pay little tax qualify for exemptions that are, for example, linked to scientific research. Nevertheless, the study will fuel the debate over whether the Government should reform the way in which British-based companies are taxed on their overseas income, or whether doing so would have a corrosive effect on the economy by driving jobs and investment offshore.
Richard Murphy, an accountant with Tax Research UK, who contributed to the research, believes that the system is in urgent need of reform. He said: “Why does the UK have a tax structure where you can have significant operations in the UK but pay all your tax overseas? We have an extremely generous corporate regime, which needs to be reexamined if this is the case.”
A spokesman for Vodafone, which has 18 million UK customers, said that the company refused to be drawn into the debate over relocating and emphasised that even though the company had paid no UK corporation tax in 2007, it had done so in previous years and made other tax payments.
Mr Murphy cited Rolls-Royce, the jet-engine maker, which employs 22,900 of its 38,600-strong global workforce in the UK but paid only £13 million in British taxes last year because the majority of its £733 million pretax profit was earned from overseas sales. Rolls-Royce, which says that it has no plans to relocate overseas, pointed out that its UK manufacturing and research operation was costly.
However, Mr Murphy said: “This cost structure is inevitable, but international rules for pricing within a group of companies allow for this and should usually result in tax being paid where the profit is generated. I’d usually expect that to be where most of its people are, especially in an R&D-based company.”