News on 24 October 2000

CBI presses for £3bn tax cuts

The Confederation of British Industry this week launched a campaign to convince Chancellor Gordon Brown to ease concern about rising business costs by cutting tax burdens.

Despite the target reduction of £3bn, the CBI says this represents a relatively modest change to fiscal policy. It adds that inflation and interest rates would almost certainly rise if the 2001 Budget included major tax reductions or spending increases.

The CBI argues that companies have become increasingly alarmed by the rising business tax burden, which has gone up by £5 billion a year in this parliament.

Adding to the problems have been a raft of new regulations and the weakness of the euro, which have both made it harder to compete in global markets.

CBI chief economic adviser Kate Barker said: "Mr Brown has large spending increases already in the pipeline and little room to manoeuvre without stoking inflation. But there is a case for carefully targeted tax cuts to mitigate the business cost problems.

"The top priority must be rolling back the hike in business taxation since 1997. We are very concerned about low levels of planned company investment. This could impact on future economic growth unless tax policy starts moving in the right direction."

The CBI is advocating a number of steps, including:

  • Extending eligibility for discounts on the Climate Change Levy
  • Reviewing policies that contribute to high transportation costs
  • Introducing incentives for innovation.

Elliott Chase

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