date: 7 March 2008
embargo: 00:01 hours Monday 10 March 2008
A TUC analysis of the CBI's Tax Task Force Report published today (Monday) says that its proposals add up to a 'tax dodgers' charter' which, if implemented, would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning Government commitments on child poverty.
TUC General Secretary Brendan Barber said, 'The Chancellor must use his budget to give a firm no to this special pleading and strongly rebuff the business lobbying for a u-turn on the inadequate proposals to levy non-doms.
'The CBI is calling for both much lower rates of corporation tax and for a huge increase in opportunities for big businesses and the super-rich to avoid paying their fair share of tax. If it's lobbying was to succeed it would lead to tax hikes for ordinary people, damaging cuts to public services and abandoning Government commitments on child poverty.
'Their plan to end the favourable tax rates for small business is likely to provoke a backlash from small business organisations.
'The CBI might as well hang a giant 'tax is for the little people' banner from it's office windows.'
The TUC analysis says that a headline corporation tax rate of 18 per cent within eight years means companies will have lower tax rates than any individual. This would produce massive tax avoidance as individuals, particularly the super-rich, set up companies to hold their savings and investments to avoid tax. The poorest will lose out as they don't have savings or investments and pay tax on all their earnings.
Previous TUC research has already shown that the top 50 companies have an average effective corporation tax rate of 22 per cent, not the 30 per cent that Parliament approved. If the headline rate was cut, but no measures were made to close the avoidance loopholes, it would mean that the effective tax rate could fall as low as 10 per cent for big companies. As the CBI is also calling for an end to favourable rates of corporation tax for small business, this would mean large companies who can afford tax avoidance advice and off-shore operations would pay less tax than small businesses.
The proposal to calculate tax on the basis of existing company accounts would open up further ways of avoiding tax. Companies will start to write off all their equipment costs in a year or two to get maximum tax relief in the shortest time possible. This could produce a very significant cut in the tax take.
Many of the technical measures the report calls for will provide further opportunities for big companies and the super-rich to avoid even more tax. Both the call for proactive UK government action on all cross border tax issues and to adopt an exemption system for non-UK source profits will provide new opportunities to avoid tax. It will mean that when a subsidiary sets up in a tax haven with zero tax rates, no tax will ever be due when that money comes back to the UK.
TUC General Secretary Brendan Barber said: 'These proposals add up to being a massive licence to shift money offshore, and thus avoid tax.
Commenting on the CBI proposal for a non-political, independent tax commission Brendan Barber said: 'The CBI is either astonishingly naïve or extremely disingenuous if it believes there could be such a thing as a non-political tax commission. Nothing is more political than tax policy. How much should be paid and who should pay it should be resolved by the democratic process. I can't see ordinary tax payers having a say in such a commission. It would be like asking Britain's poachers to regulate game-keeping.'
NOTES TO EDITORS:
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Issued: 10 March, 2008