§ 1. Mr. WhittingdaleTo ask the Chancellor of the Exchequer what account he takes in setting the corporation tax rate in Britain of that of the United Kingdom's major competitors; and if he will make a statement.
§ The Financial Secretary to the Treasury (Mr. Stephen Dorrell)My right hon. and learned Friend the Chancellor of the Exchequer pays careful attention to the corporation tax rates in the United Kingdom's major competitor countries. The United Kingdom's main rate of corporation tax is the lowest of any major industrial country.
§ Mr. WhittingdaleWill my hon. Friend confirm that not only do we have the lowest rate of corporation tax for larger firms of any country in the European Community, but our corporation tax regime for smaller firms is also the most generous in the whole of Europe? Is it not also true that the Labour party is pledged to increase the rate of tax on businesses and make them closer to the levels in other Community countries, which would increase business costs and destroy jobs?
§ Mr. DorrellMy hon. Friend is right on each count. The socialist manifesto for the European elections made precisely the commitment to which he refers. My hon. Friend is also right to say that our corporation tax rates compare well with those elsewhere in the world. That is partly why we have such a successful record in attracting inward investment, which has created more than half a million jobs in Britain over the past 14 years.
§ Mr. Campbell-SavoursIf everything is so wonderful, why do we have a trade deficit?
§ Mr. DorrellPart of the reason why we have falling unemployment, and inflation under better control than at any time for a quarter of a century, is that the Government have taken the decisions necessary to put economic disciplines in place. That is why the economic forecast published this week gives one of the best outlooks for the British economy in living memory.