Newly appointed Chancellor, George Osborne, has pledged to cut the headline rate of corporation tax in an effort to tempt multinational businesses back to the UK.
Speaking at the annual dinner of the Confederation of British Industry (CBI), Osborne revealed that he will set out a ‘five year road for a big reform of corporation tax’ in the emergency Budget next month.
He added that the coalition was committed to creating the most competitive corporate tax regime in the G20.
‘We will reform the corporate tax system by simplifying reliefs and allowances, and tackling avoidance, in order to reduce headline rates,’ he said. ‘And I want to help new businesses by abolishing employers’ national insurance contributions on the first ten jobs they create.’
Osborne concluded his speech by declaring that ‘Britain is once again open for business.’
Experts have calculated that a 3% reduction in the corporation tax rate would cost the Treasury some £4.5 billion a year, revenue that the Chancellor hopes to recoup through allowance cuts and a crack down on tax avoidance.
Responding to the speech, John Cridland, deputy director-general of the CBI, said: ‘The Chancellor hit the right note. We are pleased that he has recognised that the tax competitiveness of the UK is challenged, and business will warmly encourage a five-year road map which will encourage economic growth.’