Cut taxes by £20bn, urge business chiefs

Business chiefs have called for temporary cuts in income tax and corporation tax.

This will lead to a '£20 billion fiscal stimulus' without the need for increased spending, claims the Institute of Directors (IoD), which represents 52,000 bosses across the spectrum of industries.

'Once in a generation, financial crisis means that aggressive use of fiscal policy is needed to support monetary policy in reducing the severity of the recession,' remarked the organisation, which called for 'a plan needed to bring the public finances back to balance in the medium term'.

In its representations for the Pre-Budget Report, the IoD has demanded that taxes for 2009-10 be reduced by £20 billion. This would be achieved via a 3p drop in the basic rate of income tax and a 4p reduction in the main rate of corporation tax.

The institute was clear, however, that 'a clear route back to balanced public finances in the medium term' should be emphasised by the Chancellor, and the Treasury must plan to phase-out tax cuts over a five-year period.

The IoD added that 'it is also essential to control public spending growth, both to minimise the risk that taxes will need to be put up again and to restore the credibility of the UK's fiscal position with international investors.

'[We are] calling for a strict new rule, limiting the real growth in public spending to 2% a year over any five-year period.'
 
IoD director general Miles Templeman said the UK needs 'to see an aggressive use of both monetary and fiscal policy'.

Categories: News , Institute of Directors , Companies , Income Tax