§ 4. Mr. GillTo ask the Chancellor of the Exchequer what is the corporation tax rate in the United Kingdom and other Organisation for Economic Co-operation and Development countries.
§ The Financial Secretary to the Treasury (Mr. Peter Lilley)The United Kingdom corporation tax rate is one of the lowest in any major industrial country in the OECD. With permission, I will circulate the complete list of rates in the Official Report.
§ Mr. GillI congratulate the Government on having one of the lowest rates of corporation tax in the EEC. That could have been achieved only under a Conservative Government. I urge my hon. Friend to give further consideration to the impact of corporation tax on the many small and medium-sized companies which depend on ploughed-back profits for their investment and expansion.
§ Mr. LilleyI thank my hon. Friend for his remarks. He will know that we have a special low rate of tax for small companies. In his last Budget, my right hon. Friend the Member for Blaby (Mr. Lawson), the former Chancellor of the Exchequer, raised the threshold above which the higher rates come in. We have taken account of that already, but I shall consider further what my hon. Friend has said.
§ Mr. DuffyIs the Minister aware that the master cutlers told the Sheffield chamber of commerce at its annual dinner last week that despite the reduction in corporation tax, investment capital project decisions have become more difficult since 1983 because of the reduction in offset allowances, at a time when business men find themselves locked ever more severely into competition with European and other overseas competitors?
§ Mr. LilleySince we introduced the reforms in corporation tax, the quantity of investment has reached record levels and the quality of investment has improved considerably. That is evidenced by the profitability of industry, which is at its highest level since the 1960s. Despite the fact that we have the lowest rate in the OECD, the revenues from corporation tax have doubled in cash terms.
§ Mrs. CurrieIs it not true that our favourable corporation tax rates are a major factor in encouraging foreign investment in this country? Is my hon. Friend aware that yesterday we heard that the compulsory purchase order had been granted for the land in my constituency required by Toyota, which will shortly be investing more than £700 million in our country? Is not the fact that that business is coming to Britain a tribute to our good work force and our favourable business environment? No other sweeteners are needed.
§ Mr. LilleyMy hon. Friend is correct. Foreign businesses, like British businesses, prefer a low-tax low-subsidy regime rather than the high-tax and, inevitably, high-subsidy regime that Labour offered. The success of my hon. Friend's constituents and others in Derbyshire in attracting Toyota is a tribute to them, as is the success of the tax regime that we have provided in attracting it to Britain.
§ Following is the information:
| Main national rate per cent. | Total national and local tax | |
| Australia | 39.0 | — |
| Austria | 30.0 | 40.1 |
| Belgium | 43.0 | — |
| Canada | 28.0 | 143.5 |
| Denmark | 50.0 | — |
| Finland | 33.0 | 46.5–51.5 |
| France | 42.0 | — |
| Germany | 56.0 | 264.8 |
| Greece | 46.0 | — |
| Iceland | 51.0 | — |
| Ireland | 43.0 | — |
| Main national rate per cent. | Total national and local tax | |
| Italy | 36.0 | 46.4 |
| Japan | 40.0 | 356.0 |
| Luxembourg | 34.0 | 41.2 |
| Netherlands | 35.0 | — |
| New Zealand | 33.0 | — |
| Norway | 50.8 | — |
| Portugal | 36.5 | — |
| Spain | 35.0 | 35.7 |
| Sweden | 52.0 | — |
| Switzerland | 9.8 | 429.2 |
| Turkey | 46.0 | 47.84 |
| United Kingdom | 35.0 | — |
| United States of America | 34.0 | 40.13 |
| 1 Ontario. | ||
| 2 Average. | ||
| 3 Approximate average. | ||
| 4 Zurich. |
§ Notes:
§ 1. The rates of company tax shown are those at present in force.
§ 2. There are lower rates for smaller companies in Belgium, Canada, Finland, Germany, Japan, Luxembourg, United Kingdom and United States of America.