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CBI argues for a "competitive" tax system

In 2010-11, businesses paid more than a quarter of the total UK tax take of £551bn.

UK businesses pay around a quarter, £163bn, of the country’s total tax revenue, and a competitive tax system is essential to the economy and prosperity, John Cridland, director-general at the Confederation of British Industry (CBI) argued in a speech today.

Launching a new report titled Tax and British Business: Making the Case, Cridland said that:

UK businesses need to be competitive on the world stage and are perfectly entitled to operate in low-tax jurisdictions for legitimate business purposes.

The report shows why a balanced and proportionate tax regime is needed to allow business to continue to grow the UK economy and contribute to society, and is about bringing an informed voice to the UK business tax debate.

Out of business’ total contribution in 2010-11, 26 per cent (£42bn) was from corporation tax, the rest being paid through a number of other taxes. The report also shows that a UK business pays more corporation tax than businesses in many of its competitor countries, even those with a much higher rate.

In the current era of austerity there is also a great deal of concern that businesses either abuse the system or even evade paying their proper contribution. While it is important to have a debate about business tax it is vital that that discussion is based on facts and on an understanding of the whole purpose of the tax system, rather than on misinformation, misunderstanding or prejudice.

In his speech, Cridland made clear that an important distinction had to be drawn between transparent low-tax jurisdictions and ‘tax havens’ that hide behind secrecy, adding that:

Tax has become a more important issue for most companies and is often now on the agenda of the board of directors. . .

Taxpayers have to work out how much tax they are legally obliged to pay according to the combination of some long-established principles in the statute and other measures including incentives or penalties which change more regularly. Not only is the management of tax costs permitted by law, it is often directly encouraged by government incentives. . .

The UK government has announced its intention to construct the most competitive regime in the G20 to encourage companies to invest and stay in the UK. This does not just mean a competitive headline rate of corporation tax, but includes the use of other incentives to ensure the UK tax environment is attractive to business. However, tax competitiveness is important to governments, and to the national economy. If certain tax incentives give the UK a competitive edge, then the UK benefits.

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Is anyone prepared to solve the NHS funding crisis?

As long as the political taboo on raising taxes endures, the service will be in financial peril. 

It has long been clear that the NHS is in financial ill-health. But today's figures, conveniently delayed until after the Conservative conference, are still stunningly bad. The service ran a deficit of £930m between April and June (greater than the £820m recorded for the whole of the 2014/15 financial year) and is on course for a shortfall of at least £2bn this year - its worst position for a generation. 

Though often described as having been shielded from austerity, owing to its ring-fenced budget, the NHS is enduring the toughest spending settlement in its history. Since 1950, health spending has grown at an average annual rate of 4 per cent, but over the last parliament it rose by just 0.5 per cent. An ageing population, rising treatment costs and the social care crisis all mean that the NHS has to run merely to stand still. The Tories have pledged to provide £10bn more for the service but this still leaves £20bn of efficiency savings required. 

Speculation is now turning to whether George Osborne will provide an emergency injection of funds in the Autumn Statement on 25 November. But the long-term question is whether anyone is prepared to offer a sustainable solution to the crisis. Health experts argue that only a rise in general taxation (income tax, VAT, national insurance), patient charges or a hypothecated "health tax" will secure the future of a universal, high-quality service. But the political taboo against increasing taxes on all but the richest means no politician has ventured into this territory. Shadow health secretary Heidi Alexander has today called for the government to "find money urgently to get through the coming winter months". But the bigger question is whether, under Jeremy Corbyn, Labour is prepared to go beyond sticking-plaster solutions. 

George Eaton is political editor of the New Statesman.