The Telegraph, April 30, Roger Bootle
We are told that the Government wants to improve relations with business. And for its part, business wants to improve relations with the Government.
Just as well, because being able to achieve a decent rate of economic growth depends upon business being confident and optimistic about the economic future, not least in order to ensure an enhanced rate of investment.
But the climate for business in this country is currently not very favourable. This is the result of both specific measures taken by the Government and much more elusive, but still very important, cultural factors.
The most notable recent specific anti-business measure is the decision to raise corporation tax from 19pc to 25pc. This comes on top of a succession of personal tax increases that will hit many businesspeople, among others. Moreover, for a prolonged period firms have been subject to a barrage of intrusive regulations which impede business and raise costs.
Expectations about the future have a key bearing on the effects of any given current tax rate. After all, businesses have to think about what the tax rate will be when the profits from their putative investments start to flow in. This Government has succeeded in implanting the idea that even when the fiscal position improves, corporation tax will not come down.
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