DAN ATKINSON: CBI should pay the going rate

By DAN ATKINSON
Updated: 17:04 EST, 25 December 2010

Think of a vastly expensive and pointless transport project, apparently intended to speed VIPs more swiftly to their destinations, involving huge environmental damage, billions of pounds of taxpayers' money and massive public opposition.

Yes, it is the 1971 third London airport at Maplin Sands, Essex, a widely hated scheme from Ted Heath's premiership and part of a doomed technology fix for Britain's economic problems.

Happily, the idea was ditched. But for those of us who have always suspected the Coalition is largely Ted Revisited, the high-speed London-Birmingham rail link is all the proof we need. Those on low incomes are having their bus and housing subsidies slashed to pay for countryside-gouging bullet trains for business executives.

With one or two caveats, the fundamentally Heathite Confederation of British Industry is frightfully keen. What a surprise. Here is an outfit deeply committed to having its cake and eating it. Low taxes? Absolutely. Disciplined public finances? Check. Lavish expenditure on 'infrastructure' contracts for which big companies can tender? Bring it on.

To be fair, the CBI is at least representative of the general outlook of many of its members. You just have to look at the endless grumbling and lobbying over Corporation Tax, the only tax levied specifically on incorporated commercial bodies.

Hardly had Chancellor George Osborne outlined a timetable for cutting the tax from 28 per cent to 24 per cent by 2014 than Kraft, the American food giant, was found to be moving the tax residency of its recently acquired British subsidiary Cadbury to Zurich.

Apologists for this sort of behaviour were quick to point out that Britain's Corporation Tax rate is 'uncompetitive', which it is if the comparison is with Zurich, where the effective rate can be below ten per cent.

But as recently as 1984, Britain's rate was a whopping 52 per cent, and it took a long while to get down to its present, allegedly uncompetitive, level.

Corporation Tax is, in effect, a profits tax, which is in fact what it was called until 1965. And there is an argument that it is an unfair tax because it is levied on economic activity that has been taxed already.

This is not a very strong point because it could be applied to almost any tax. But even if it had some substance, how would it square with the demands of business organisations for a better-educated workforce, for better infrastructure and for fatter contracts for members?

The Treasury is being dragged into what amounts to a price war on Corporation Tax. But in a real, commercial price war, those demanding ever-deeper discounts can always be told, quite firmly, that if they will not pay the going rate, they will not enjoy the services on offer.

A good business principle and a good trade union principle, too. Happy New Year.

Read more at http://atkinson blog.dailymail.co.uk/