Businesses' £163bn tax boost for government
From recent headlines blurring the distinction between
legitimate practices and evasion, you might believe that British
business contributes next to nothing to government tax
Yet in the year 2010-11, business paid about £163 billion
in taxes, over a quarter of all tax revenue - roughly the
equivalent of the combined 2010 budgets for the Departments of
Health and Education, and the Police.
But this is not the full story. In addition to paying
corporation tax on their £42bn profits, businesses also contribute
as property owners, employers and consumers; £24bn -business rates,
£56bn - National Insurance and £40bn - fuel duty and others,
British business underpins a vast amount of revenue
available to the government, and it should also be made clear that
the scope and appetite for what is known as abusive tax avoidance
has already been severely circumscribed for large
Previous abuses have been reduced or
It should also be recognised that responsible management
of tax issues is a necessary part of business activity, made more
important by the complexities of UK and international tax
It is absolutely right that no business should engage in
abusive tax arrangements. However, in running day to day
activities, as well as in commercial transactions, businesses need
to manage their tax affairs. Their size matters not one jot as the
sums involved are relative.
Most UK businesses would never contemplate evading or
defrauding the government. But they have been slow to join the
public debate to defend their record and advocate pro-growth tax
In the Budget, the Chancellor sent out a strong signal by
announcing his intention to construct the most competitive tax
regime in the G20 to encourage companies to invest and stay in the
This is extremely encouraging since in an era of global
competition, business places a much larger value on operating
within simple and predictable tax environments.
Again this might be seen as natural territory for the "big
boys," but we need to remember that these companies sit atop a
large and long supply chain which feeds down to the smallest
company by way of products or services.
I don't expect the issue of "tax cheats" to ever go away.
But it is time for the shroud to be lifted and misinformation
dispelled so that everyone can understand how a competitive tax
system can benefit us all.