John Redwood MP: "I am a company director and a shareholder in companies, as I have declared in the register, but not, I think, of a company that will be paying this particular tax in the current year.
I rise to support the idea that the tax should be 20 and not 21 per cent. and that it should not go up to 22 per cent. subsequently, and I ask the Government to think again about their extraordinary U-turn in their policy towards lower tax rates for people on lower income and for smaller and start-up companies that earn less profit than more mature companies that have gone on to grow for longer and perhaps more successfully.
The Government produced an attractive package when they decided to encourage incorporation by having a zero tax rate on small profits for companies that had recently incorporated, and when they decided to have a 10p capital gains tax charge on people who set up companies, who took founder shareholdings in companies or who decided to buy into companies that were small and growing and could take advantage of that privileged capital gains tax regime.
We saw a response to that favourable tax regime in the improvement in
the rate of new company formation. A lot of people in the small
business groups around the country were saying to Opposition
representatives, as well as to Government representatives, that the
Government had got something right and that that part of the tax regime
was favourable. It was an encouragement that those people very much
welcomed, so it is strange and extremely disappointing that the
Government should have backtracked on both elements of that attractive
regime and that they have not learned the lesson from a country such as
Ireland, which has persevered with a much more favourable tax regime
for business across the board—businesses large and small—and has had
the phenomenal success that we see in the Irish growth rate, the
development of Irish business within the Republic and the collection of
so much more tax revenue in general by the Irish Treasury.
As more people have got better jobs and taken more income out of
smaller and larger companies, and as more smaller and larger companies
have grown, been successful and produced capital gains, dividends,
income and good jobs for people, so the economy as a whole has
benefited from that process, and so the Irish Treasury has benefited,
having more money to spend per head on public services as a result of
that growth than has been available from the British Treasury’s
attempts to find ever more stealth taxes to sustain more rapid growth
in spending per head on public services here."