Tax Matters

19 October 2006

The IoD warmly welcomes Tax Matters, the report of the independent Tax Reform Commission. It sets out a clear vision for a better tax system.

The IoD has argued consistently that the UK tax system is becoming ever more burdensome, both in cash terms and complexity. UK competitiveness is being undermined by the current tax system and radical reform is required.

The Tax Reform Commission report sets out a vision of less and simpler taxes on business. The proposal to reduce the main rate of corporation tax to 25%, financed in part by a replacement of the scheduler system, with one based on accounts, is a bold step in the right direction.

A reduction to 25%, combined with simplification of the corporate tax system, should help prevent a future corporate exodus from the UK for tax reasons. The IoD also stated that proposals for the elimination of a wide range of reliefs and allowances were a welcome simplification.

Graeme Leach, Chief Economist at the IoD, and a member of the Tax Reform Commission said:

“The business voices on the Commission were united in their calls for radical reform. The tax burden in the UK is too high and must be brought down; otherwise we risk further erosion in our competitiveness.”

In a recent survey 60% of IoD members said the UK tax system was having a negative impact on competitiveness.

1 in 5 members said they would consider transferring operations outside the UK, due solely to the complexity of the UK tax system.

Graeme Leach added:

“This was an independent report from an independent commission and politicians from all parties should seriously consider the findings. The clock is ticking and we need urgent action.”