Tuesday, 14 July 2015

Jobs growth will follow the Chancellor decision to cut corporation tax to 18%

Cutting taxes on businesses stimulates that business and makes it easier for it to expand and create new jobs. Corporation tax was nearly 30% under the Labour government of Gordon Brown. It had a predictable effect.
There is no doubt that previous reductions in Corporation tax from 28 per cent to 20 per cent over the last parliament has created jobs and increased investment. The decision the Chancellor announced in his budget that the rate would be reduced to the new level of 18% by 2020, with a 1 per cent interim cut in 2017 is wonderful news, and allows businesses to plan. It also makes it easier for them to pay the Living Wage.
The Chancellor said:
“Now at 20% for large and small businesses alike we have the joint lowest rate of corporation tax in the G20 but it will fall to 19% in 2017 and 18% in 2020.”

The Corporate tax rate in France’s is 33.3 per cent, Japan’s is 33 per cent, and German’s is 29.65 per cent. Self evidently this will make it more likely that big manufacturers will set up plants here, rather than in France or our other competitors. There has also been a reduction in NI contributions and business rates are being reviewed.