Partner Article

No place for sentiment and uninformed opinion in taxation

There isn’t much room for sentiment and uninformed opinion in taxation. So, with positioning for the 2015 election now well underway, three statements from the Labour Party yesterday will have businesses holding their heads in their hands.

Tax practitioners and pensioners too, but that’s another story.

Distilled to their essence, these are the three propositions:

• We in the Labour Party will improve the lot of the low paid (always a good thing - ed) by using the tax system to encourage employers to pay a living wage. Employers who do this will pay less corporation tax.
• No they won’t. The tax incentive will come in the form of a reduction in rates paid by small businesses.
• That’s incorrect. All small businesses will enjoy a reduction in corporation tax although we will not implement the reduction in the main rate of corporation tax to 20%, as proposed by the current government.

Taken together, these statements are inconsistent, uncertain and confusing. Some of them are undoubtedly subjective.

Equally subjective is the view expressed by others that Boots – having being criticized for perceived tax avoidance – ought to be prohibited from participating in NHS tenders.

On the face of it, nothing which Boots is said to have done to mitigate its tax liabilities is outside the law. Subjectivity is no more a basis for running government tenders than it is for developing tax policy. And in the case of tenders, if companies which one group of MPs or another did not like were excluded from the process, then the shortlist might be very short indeed. As those involved with other areas of government procurement are discovering.

This was posted in Bdaily's Members' News section by George Bull .