§ Mr. RedwoodTo ask the President of the Board of Trade, pursuant to the oral statement by the hon. Member for Makerfield (Mr. McCartney) of 13 July 1998,Official Report, column 72, what was the basis of the calculation that the Government will cut corporate tax bills by £4.5 billion. [51415]
§ Mrs. BeckettOver the lifetime of this Parliament, the impact of lower corporation tax rates and more generous capital allowances for small companies is to reduce companies' corporation tax bills by about £12 billion. Against this, the short-term impact of replacing advance corporation tax by quarterly instalment payments is to bring forward some of the tax paid by larger companies. The net effect, in cash terms, is to reduce companies' corporation tax bills by around £4.5 billion in total over the five-year period ending in 2001–02. Once the46W temporary timing effects have worked through, corporation tax bills will be about £4 billion a year lower as a result of this Government's reforms.
The windfall tax and changes to the tax treatment of dividend income do not have any direct effect on the yield of corporation tax.
§ Mr. RedwoodTo ask the President of the Board of Trade what assessment she has made of the impact of(a) corporation tax, (b) the windfall tax and (c) advance corporation tax changes made by the Government on British businesses. [51416]
§ Mrs. BeckettThe financial impact of each of these changes is set out in the Financial Statement and Budget Report. The cuts in corporation tax to the lowest rate ever in the UK and the lowest of any major EU economy, the Welfare to Work programme funded by the tax on the excess profits of the privatised utilities, and simplification of the tax system from the abolition of advance corporation tax, are all contributing to an environment in which businesses can thrive.