HC Deb 28 November 1991 vol 199 cc1051-2
2. Mr. Gill

To ask the Chancellor of the Exchequer what is the level of corporation tax for small companies; and what it was 12 years ago.

The Financial Secretary to the Treasury (Mr. Francis Maude)

The small companies rate of corporation tax is 25 per cent. compared with 42 per cent. at the time of the 1979 general election.

Mr. Gill

I congratulate my hon. Friend on the Government's significant progress in reducing corporate tax rates. However, will he assure the House that the importance of retained profits is truly understood by his Department, especially in relation to unquoted companies where the profits ploughed back by those companies are often the only source of capital? If that seedcorn is confiscated, it inevitably drives companies into the hands of their bankers, which gives rise to many of the problems that small businesses are currently experiencing.

Mr. Maude

I take my hon. Friend's question as an expression of support for our policy of increasing the amount of profit that is left with companies for them to retain or distribute as they think proper. That is the best way of providing a good environment in which businesses can flourish. That is the judgment not just of the Government, but of those hard-hearted characters who decide where mobile investment projects should go ill the EC. The majority of Japanese mobile investment projects and many of the American projects are coming to Britain in preference to anywhere else because Britain has the best environment in which to do business.

Mr. Battle

Is not the uniform business rate imposed by the Government hammering small businesses which cannot pay it? Is not that an extra tax that the Government have imposed on business?

Mr. Maude

Britain is full of small business people who are breathing a sigh of relief that their business rate is limited to an increase in the retail prices index rather than the 60 or 70 per cent. annual increases that some irresponsible Labour-controlled councils were imposing and which had the sole effect of driving businesses out of many of our major inner-city centres.

Mr. Hill

My hon. Friend will realise that his statement on corporation tax for small companies needs slight adjustment and I am sure that he is considering a major adjustment on capital gains, which I understand is one of the taxes where the cost of collection exceeds the revenue. Will he consider those matters before the next budget?

Mr. Maude

I treat my hon. Friend's question as an early Budget representation, which I have noted and will consider carefully.