§ 9. Mr. Clemitsonasked the Chancellor of the Exchequer what has been the total amount paid by the 100 largest companies in corporation tax expressed as a percentage of profits declared in each of the past five years for which figures are available.
§ Mr. Robert SheldonInformation in the form requested is not readily available, but corporation tax receipts this year are expected to be about £4 billion.
§ Mr. ClemitsonIs it not true that, whether corporation tax is seen as a percentage of GDP or as a percentage of the total tax obtained, British companies pay considerably less than their counterparts in our major competitor countries? If we are to look for the real reasons for our poor economic performance should we not look elsewhere than at the so-called disincentive effects of taxation?
§ Mr. SheldonI have always felt that the arguments about incentives in taxation are much more complex than are frequently allowed for in debate in the House. My hon. Friend will be aware that stock relief and capital allowances reduce the intake of corporation tax, for very good reasons. First, because of investment that is undertaken, and, secondly, because if that were not undertaken we would find that, in real terms, negative profits could be taxed.
§ Sir Geoffrey HoweHas the Financial Secretary noticed that the Governor of the Bank of England and the OECD have said clearly in the past few weeks that profits in this country are at a dangerously low level—lower than they are in any of our competitor countries, for example, France, Germany and the United States? Will he confirm that, apart from corporation tax, this year British industry will pay almost £4,000 million in national insurance surcharge? Will he take that as a clear warning that it would be the height of folly for the national insurance surcharge to be increased in the forthcoming Budget?
§ Mr. SheldonThe right hon. and learned Gentleman cannot exclude corporation tax as one of the payments that companies make. If that is taken into account with the national insurance surcharge he will see that, by comparison with other countries, British companies do not bear the heavy burden that he is trying to impute to them. In many other countries there is a near equivalent of our national insurance surcharge. Those countries pay very much larger amounts in that way.
§ Mr. HooleyIs it not a fact that the number of major multinational companies 1678 based in the United Kingdom are not paying any mainstream corporation tax in the current financial year? How will my right hon. Friend remedy that?
§ Mr. SheldonThere are good reasons why certain companies do not pay large amounts of mainstream corporation tax; for example, investment and stock relief. For the reasons that I mentioned earlier, it is right that those beliefs should be given. We should be aware that the problem of reaching a final conclusion on these matters is becoming urgent. We are anxiously awaiting the agreed solution of the accountancy profession, which will provide for the more rational continuance of corporation tax in the manner in which it was originally devised.
§ Mr. HordernDoes the Financial Secretary agree that the high nominal rate of corporation tax is misleading? It produces very little revenue when compared with other taxes. Will the right hon. Gentleman look with equanimity on the considerable growth in leasing activities and other means of reducing the burden of corporation tax?
§ Mr. SheldonThe hon. Gentleman is correct. The rate of corporation tax is not in close relationship to its yield, for the reasons that I have given. Leasing represents considerable problems. There are considerable advantages in leasing, for both the customer of the investment products and the manufacturer. The matter should be closely examined.