May hints at further corporate tax cuts to calm business | Taxes and expenses
Theresa May is due to suggest further corporate tax cuts to match those proposed by Donald Trump as she presents a series of pro-business proposals at the annual conference of the Confederation of British Industry (CBI) on Monday morning.
In his first speech to the organization as Prime Minister, May was set to outline his ‘aim’ for the UK to retain its status as the country with the lowest corporate tax rate in the group of G20 countries.
In the UK it is currently 20% and is expected to fall to 17% by 2020. However, Trump, the President-elect, has spoken of reducing the equivalent of US federal tax from 35% to 15%, which increases the possibility of further cuts in the UK.
May was also due to commit the UK to a £2billion annual fund for scientific research and development and a review of tax incentives for innovative companies in a bid to boost the tech industry.
In her maiden speech at the CBI’s annual conference, May will outline “the first steps of a modern and ambitious industrial strategy” following growing anger among bosses over her administration’s approach to big business.
Growing frustration with No 10 was revealed last month when Carolyn Fairbairn, chief executive of the CBI, publicly accused May of ‘closing the door’ to Britain’s open economy. This followed industry concerns that the new prime minister was less business-friendly than his predecessor, David Cameron.
She was to use the speech in central London to outline the elements of this week’s autumn statement and to say she will “always believe in business” and the benefits it brings.
“In Wednesday’s autumn statement, we pledge to substantially increase public investment in R&D in real terms by investing an additional £2bn a year by the end of this parliament to help place Great Britain Post-Brexit Britain at the forefront of science and technology,” she was to say.
“And we will also look at the support we give to innovative businesses through the tax system…because my aim is not just for the UK to have the lowest corporate tax rate in the G20, but also a rate deeply favorable to innovation.”
The Prime Minister was also expected to announce a new Industrial Strategy Challenge Fund to support priority technologies, such as robotics and biotechnology.
May will also announce a review of research and development tax incentives to ensure the UK’s global competitiveness as a home for scientists, innovators and technology investors.
She will say, “It is not about supporting failing industries or picking winners, but about creating the conditions for winners to emerge and grow. It’s about supporting these winners all the way, encouraging them to invest in Britain’s long-term future and creating jobs and economic growth in every community and every corner of the country.
“That’s the ambition – and we need your help to put it into practice.”
In other parts of the speech announced ahead of time, May was to stress that companies need to do “more to spread these benefits across the country, playing by the same tax and behavioral rules as everyone else, and investing in Britain for the long term”.
She was to say, “We believe in free markets. They are the means by which we expand opportunities and lift people out of poverty. We believe in capitalism – the means by which we drive economic growth, putting people to work to support their families. And we believe in businesses – the entrepreneurs and innovators who employ millions of people across the country – the foundation of our prosperity. “
The idea of cutting corporation tax was floated in the Sunday Express last month as a way to woo banks considering leaving the UK due to impending Brexit.
Former Chancellor George Osborne previously floated the idea of cutting corporation tax to 15% to reassure businesses worried about the impact of Brexit. He had already reduced the rate from 28% to the current 20% during his tenure.
May upset some business leaders in June when she walked into Downing Street with a promise to be guided “not by the interests of a privileged few” but by the concerns of ordinary working people.
A few months later, his hard-line rhetoric on immigration at the Conservative Party conference, which suggested the government was heading for a hard Brexit outside the European single market, sparked fresh concerns in boardrooms.
In Monday’s speech, she will also offer an olive branch to business leaders over plans to place workers on boards, which have sparked a backlash in the city.
Referring to the forthcoming Green Paper on corporate governance, the Prime Minister will emphasize that she will take into account the opinion of business leaders. “It’s going to be real consultation – we want to work in business sense and learn from what works. But it will also be a consultation that will yield results,” she said.
Asked about it on BBC Radio 4’s Today programme, Business Secretary Greg Clark declined to confirm that the workers’ representation plans would remain in their original form, saying only: “We will come up with a range of ways through which these voices can be represented on boards of directors.
Clark said the government could insist on restrictions on top executive pay in return for pro-business policies, saying: “Part of this deal that we need to have is that we need a much more rigorous approach to executive compensation.” That could include banning pay rises voted against by shareholders, he said.
Hours later, Jeremy Corbyn will tell industry leaders that “workers will be on the side of innovators, entrepreneurs and investors” as long as they “keep up their end of the bargain” by treating workers fairly.
The Labor leader will say that companies must pay living wages, respect workers’ rights and pay the taxes they owe. In return, a Labor government would use a £500billion National Investment Bank to ‘break the deadlock’ in bank lending which has ‘starved’ small and medium-sized businesses.
A Labor government “would use public intervention to unleash the creativity and potential of British entrepreneurship,” Corbyn will say.
He will insist he has a mandate for change from the Brexit vote and the election of Donald Trump as President of the United States, which he says show the current economic system has been thrown off by voters facing “rising” inequality and falling or stagnating living standards.
Corbyn would say in central London: “Labour is leading the way to a better alternative that relies on good intervention. In fact, it is an intervention for the common good. In 1963, Harold Wilson said that if the country was to prosper, a new Britain would have to be forged in the white heat of a scientific revolution.
“More than 50 years later, we now face the task of creating a new Britain, not just from Brexit and a new relationship with Europe, but from the challenge of the fourth industrial revolution. – powered by the Internet of Things and big data to develop cyber physical systems and smart factories.