Budget: Corporation tax cuts to boost business

Grant Prior 12 years ago

Chancellor George Osborne said his budget will reward work and back business while staying “unwavering” in his bid to reduce the national deficit.

New “growth friendly” planning laws were promised and new infrastructure to help business prosper.

Osborne said the economy would avoid another recession with growth forecasts revised upwards to 0.8% this year and 2% next year then 2.7% in 2014 before hitting 3% in the two years after that.

Unemployment is also forecast to fall following an 8.7% peak this year while inflation will also drop to 1.9% this year.

Osborne said an extra £100m would be spent improving the accommodation of armed forces funded by a scaling down of the operations in Afghanistan.

He confirmed talks with a dozen UK pension funds to invest in major infrastructure schemes.

Osborne paid lip service to previous green policies but warned that “environmentally sustainable must also be fiscally sustainable.”

The National Planning Policy Framework will be published next Tuesday with 1,000 pages of regulation reduced to 50 to encourage “sustainable development”.

Tax reforms were also confirmed to make business more competitive.

Osborne said the headline rate of Corporation Tax will fall again to 24% from next month with further cuts planned to bring the rate down to 22% by 2014.

Alcohol tax duty stayed level but 37p was put on a packet of cigarettes from this evening.

The Chancellor cracked-down on Stamp Duty evasion on luxury homes and a new rate of 7% was introduced on homes worth more than £2m.

The top-rate of tax will also be reduced to 45p from 50p by April 2013.

Osborne said the controversial 50p rate has caused “massive distortions” as high-earners attempted to avoid paying-it.

Last year it raised only £1bn – a third of the original predictions.

The personal tax limit allowance will go up to £8,105 next month and by £1,100 in April 2013 to £9,205.

Osborne said 24m people earning less than £100,000 a year will benefit from this measure.

Construction Products Association Chief Executive, Michael Ankers, said: “The government clearly recognises the constraints on our economic growth imposed by the poor quality of our infrastructure and a planning system that is not fit for purpose.

“But we are still some way from seeing any benefit from the steps being taken to bring private finance into future road building and we await the details of the revolutionary planning reforms that the Chancellor referred to.

“We welcome the direction of travel set by this Budget, and the various announcements to support housing, rail investment, and development. But construction is facing a very difficult 12 to 18 months and these will not do much to change this.

“What we would have liked to see is some of the additional savings made on current spending reinvested in capital projects that will not only provide a more competitive business environment for all businesses, but also create jobs throughout the economy.

“It was particularly disappointing that the government once again failed to do anything to encourage investment in improving the energy investment in buildings, and the Budget seems to have been developed in a vacuum as far as their claims to be the ‘greenest government ever’ are concerned.

“Companies will welcome the various tax changes that will help make the tax regime more competitive and the increasing support for exports.

“One measure that has the potential to help many companies in the construction products industry is the major review of the Carbon Reduction Commitment, with the prospect that this will be replaced altogether if satisfactory revisions cannot be made. This has been a bureaucratic nightmare for our manufacturers and the sooner it is replaced the better.”

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