Tax system damaging UK, CBI says

[FiL]

Tax system damaging UK, CBI says
The UK's competitiveness is being damaged by the tax system, the Confederation of British Industry says.

The CBI says that just a few years ago Britain had one of the most favourable corporate tax environments in the world, but that has now deteriorated.

With Chancellor Alistair Darling due to give his first Budget on Wednesday, it is calling for a lower rate of corporation tax and a simpler system.

On Sunday, the Tories said they wanted to cut corporation tax to 25%.

The CBI says the UK has failed to match deep cuts made to corporation tax by nations like Italy and the Netherlands.

Weakening position

According to its report, since 1993 the main rate of UK corporation tax has been reduced by 5% to 28%, but Germany has halved its tax rate to 29.8% and the Netherlands has sliced off 9.5%, to 25.5%.

That means that the UK has slipped from fourth to sixth place in the ranking of EU nations with the lowest corporation tax rates.
The Conservatives have also put pressure on the chancellor to cut business taxes.

Shadow chancellor George Osborne told the BBC the Tories planned to pay for cutting corporation tax by scrapping a number of business tax breaks.

Interviewed on the Andrew Marr Show on Sunday, Mr Osborne said that there was currently "no scope" for a big cut in the business taxes because of the UK's budget deficit, which he described as the worst in Europe.

He said: "So I am suggesting a simplification of the system, getting rid of the very expensive reliefs and allowances that exist within the corporate tax system, and using the proceeds to cut the headline rate."

http://news.bbc.co.uk/1/hi/business/7286371.stm