News

July 19, 2013

CBI warns against big changes to the tax system

Constant changes to tax rules threaten to hamper business in the UK and the Government should allow the most recent changes to "bed down", says the CBI.

In a new report on the tax landscape, Tax in a global economy: the way forward, the CBI says the Government should avoid making further major changes to the tax system. Instead, it should allow recent positive reforms on the headline corporation tax rate, the taxation of foreign profits and the introduction of the Patent Box to take effect.

However, the CBI is recommending some small targeted improvements that it says will foster a "culture of certainty and stability", including the introduction of capital allowance for infrastructure investment, capping business rates at 2% at the very least, until full reform is possible, and reducing employers' National Insurance Contributions to boost jobs.

The CBI report also calls for the Government to spell out its principles for reforming international business tax rules. Any changes, it says, must be coordinated with other countries and applied consistently, with the core objective of maintaining or improving UK tax competitiveness.

Katja Hall, CBI chief policy director, said: "The Government has taken action to make the UK's tax regime more competitive and now needs to let the changes bed down and take effect. Constant chopping and changing of the rules risks scaring off business investors."

She added: "Some international tax rules need updating to reflect today's changing global business environment. But as the UK seeks to shape this agenda it must not crush recent competitive gains. We must coordinate reforms with other countries so UK firms are not disadvantaged."

Now is the time for a focus on domestic tax stability, says the CBI, and the Government should give the new Corporate Tax Roadmap time to take effect. In addition, it is calling for tax simplification to allow SMEs to "flourish alongside large businesses".