HC Deb 18 January 1990 vol 165 cc400-2
11. Mr. Butterfill

To ask the Chancellor of the Exchequer what is the corporation tax rate in the United Kingdom and other Organisation for Economic Cooperation and Development countries.

Mr. Lilley

The United Kingdom corporation tax rate is one of the lowest rates in the major industrial countries. With permission, I shall circulate the figures in the Official Report.

Mr. Butterfill

Does my hon. Friend agree that the present happy level of inward investment owes much to our low level of corporation tax? Does he also agree that the growth of the small business sector is largely due to that? Does he accept that small businesses need special support, and that we should continue that support—in contrast to the policies of the Opposition, who seem to attack small businesses constantly, particularly in relation to the social charter? What, in my hon. Friend's view, would be the effect of their policies on such investment?

Mr. Lilley

My hon. Friend is absolutely right. The fact that this country has the lowest rate of corporation tax makes it an attractive country in which to do business, as countless foreign investors have discovered. The fact that our corporation tax rate for small businesses is now only 25p—far the lowest of any of the rates of which I am aware—is one factor behind the healthy growth of such businesses, at a rate of more than 1,300 new businesses every week during the past year.

Mr. Mullin

In that case, are we to assume that the Chancellor has no objection to the record profits being shared with the work force?

Mr. Lilley

Profits, by definition, are measured after the benefits to the work force—both pay and profit-sharing. We have introduced schemes to encourage profit-sharing, and to give a tax incentive to companies that take part in it. I am happy to say that that has given a stimulus to the spread of profit-sharing arrangements in British industry.

Mr. Oppenheim

Would not one of the best tax-related ways of helping British industry be a reduction in tax on savings, which would make a larger pool of investment income available to industry? Is my hon. Friend aware that this country taxes savers twice—first, when they earn and then on the yield of their investments?

Mr. Lilley

I note my hon. Friend's point, and I am sure that my right hon. Friend the Chancellor has done so, too. My hon. Friend will appreciate, however, that I cannot anticipate my right hon. Friend's Budget statement.

Mr. Ron Brown

Is not the Minister really saying that Britain has become a tax haven for dodgy money, and does that not sum up the political values of his Government?

Mr. Lilley

I did not catch the first part of the hon. Gentleman's question, but I imagine that he was probably welcoming the low rate of corporation tax and the great boost that it has given to small businesses.

Following is the information:

Main national rate (per cent.) Total national + local tax
Australia 39 —
Austria 30 40.1
Belgium 143 —
Canada 28 43.5 (Ontario)
Denmark 250 —
Finland 33 47.0–52.5
France 42 —
Germany 50 60.03 (average)
Greece 46 —
Iceland 51 —
Ireland 43 —
Italy 36 46.4
Japan 40 56.0 (approx average)
Luxembourg 34 41.3
Netherlands 35 —
New Zealand 33 —
Norway 50.8 —
Portugal 36.5 —
Spain 35 35.7
Sweden 52 —
Switzerland 9.8 29.2 (Zurich)
Turkey 46 47.84

Main national rate (per cent.) Total national + local tax
United Kingdom 35 —
USA 34 40.13
1 Will be 41 per cent, from 1 January 1990 if Finance Bill is enacted.
2 Will be 35 per cent, from 1 January 1990 if Government proposals are enacted.

Notes:

  1. (1) The rates of company tax shown are those at present in force.
  2. (2) There are lower rates for smaller companies in Belgium, Canada, Finland, Germany, Japan, Luxembourg, United Kingdom and USA.