"Financing projects from £50,000 to £100 million"

Coalition plays to headlines on tax policy - Sainsbury's chief

Coalition plays to headlines on tax policy - Sainsbury's chief

The Coalition government has been accused by a leading business chief of playing to headlines when it comes to corporate taxes rather than establishing a more competitive tax system.

The Government’s is pointing to corporation tax cuts, which are to fall from 28% to 20% by the end of its term, to highlight its dedication to building a competitive business environment.

But Justin King, chief executive of J. Sainsbury, said that these cuts are being disproportionately offset by increases elsewhere.

“For every £1 we have benefited from reduction in corporation tax we have incurred more than £2 of other taxes, in particular business rates and employers' national insurance,” he said.

Despite rising sales, the supermarket posted a fall in pre-tax profits of 1.4% to £788 million for the year to 16 March, which it attributed to “challenging” conditions.

It also announced that it would be buying out the remaining half of its banking operation from the taxpayer-supported Lloyds Banking Group for £248 million.

CBI: "Schizophrenic"

Mr King’s remarks on the tax system follow a strongly-worded statement from the Confederation of British Industry (CBI), which accused the Government’s tax policy of leaving firms “schizophrenic.”

The CBI said it was supporting the work of the Organisation for Economic Co-operation and Development (OECD) to update some international tax rules, which, it said, “have lost pace with globalisation.”

But it also noted that firms have more to do improve transparency in their tax affairs, and has published a set of tax principles to encourage more responsible tax management.

In light of recent scandals involving high-profile companies, these principles include transparency with HMRC and working to increase public understanding in the tax system to establish trust in how the corporation tax system works.

John Cridland, CBI’s Director-General, said: “UK businesses make a huge tax contribution to the UK economy, paying £161 billion this year - almost a third of total tax receipts.

"But companies need to do a better job of explaining their tax affairs to the public. We are encouraging all companies to explain why they pay what they do in a straight-forward and accessible narrative, ideally on their website."

The organisation welcomed the legislative measure addressed in the Queen's Speech to implement the £2,000 National Insurance rebate proposed in the recent Budget.

The measure "will give smaller firms the confidence to take on extra staff," it said.

Thursday, 09 May 2013 10:18
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