Tax rises outweigh cut in corporation tax

A survey of finance directors of Britain’s biggest companies by PriceWaterhouse Coopers found that although their corporation tax contributions have dropped 17pc since 2005, other business taxes from VAT to national insurance and property rates, have risen by 58pc, reports The Telegraph.

Andrew Bonfield, chairman of the tax committee of the “Hundred Group” of companies surveyed by PwC, said that despite the political and public focus on the headline rate of corporation tax, businesses are increasingly being tapped via “the other” levies instead.

“Successive government policies have driven a shift of the burden of companies tax away from corporation tax, which is dependent on profits, to more indirect but reliable taxes on things like property and employees,” he said.

The Hundred Group, which comprises FTSE100 finance directors and some from UK-based private firms and international conglomerates too, said the survey ought to answer claims that big companies avoid taxes. The group said it paid £77.1bn to the Exchequer in 2012 – or 14.2pc of Government receipts – almost the same as last year, despite the economic gloom.

Mr Bonfield said: “There’s a perception that companies don’t pay their fair share of tax – this survey shows that they do. Away from the focus on the headline rate of corporation tax, there are other taxes that are being borne by companies.”

Before Christmas, the Parliamentary Public Accounts Committee (PAC) led a highly-charged debate about tax avoidance by big companies including Starbucks, Google and Amazon. Yesterday the PAC announced that it would grill the big four accounting firms, PwC, Deloitte, Ernst & Young and KPMG, on their role in helping firms minimise their tax bills.

The survey said: “In 2012, for every £1 in corporation tax, another £2 was paid in other business taxes borne, while in 2005 [when the survey started] the equivalent figure for those other taxes was £1. Over that period, the total taxes borne have increased by 19pc.”

The survey also reported an “overwhelming consensus on the need for simplicity and certainty in the UK tax system.” Finance directors pointed out that corporate tax is now one of 24 businesses taxes levied by the UK. They accepted that efforts had been made to benefit business and improve the UK’s competitiveness, including the reduction of corporation tax from 28 percent in 2010 to 21 percent in 2014, but they called for a “moratorium on further changes to the tax system now that the Government’s corporate tax reform programme has been delivered.”

The report added: “Despite Government attempts to simplify the tax system (for example by establishing the Office of Tax Simplification in 2010), the perception is that new legislation continues to be lengthy and complex, and that this often masks positive policy initiatives.”