Daily Telegraph: Lord Saatchi - Cut corporation tax for small businesses

The Conservatives should pledge to abolish corporation tax for all small businesses to allow firms to “challenge cartel capitalism”, a former Tory party chairman says.

In an article for The Telegraph Lord Saatchi, the chairman of the Centre for Policy Studies (CPS) think-tank, calls on the Government to offer major tax cuts to Britain’s small firms.

In a report to celebrate the 40th anniversary of the think-tank, which was founded by Baroness Thatcher, the CPS calls on the Government to stop imposing corporation tax on firms with fewer than 50 employees.

Capital gains tax should also be abolished for all investors in small companies, the report states.

Lord Saatchi writes that the policy would show “how the awesome power of taxation can be used to the benefit of everyone”.

He describes the measures as a “call to arms” for the Conservative Party.

By cutting corporation tax, small firms would be better able to compete with large companies, Lord Saatchi writes.

Lord Saatchi co-founded Saatchi & Saatchi, the firm closely associated with Margaret Thatcher’s three successive election victories. He was also a co-chairman of the Conservative Party until 2005.

According to the CPS report, only 0.8 per cent of all UK businesses are classed as “big” or “medium sized”.

UK small businesses currently pay around £8 billion in corporation tax annually.

“By allowing profitable small companies to retain more of their earnings it will become easier for them to self-finance their own expansion,” the report states.

Lord Saatchi writes: “The Policy, as I call it, would therefore abolish corporation tax for 90 per cent of UK companies, reduce the deficit faster than predicted by the Office for Budget Responsibility (OBR) , expand employment faster than it predicts, increase competition, challenge cartel capitalism and let millions of people grow tall.”

To read the full article, see the Daily Telegraph website.