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Darling defends rise in small business tax
17/04/2007
The trade and industry secretary, Alistair Darling, has defended the decision to raise corporation tax for small businesses, highlighting the deterring effect that the government's move could have.
Speaking on BBC Radio 4's Today programme on Monday, Mr Darling said that a rise in the number of people incorporating strictly and solely for tax purposes made the move necessary.
"There was increasing evidence that a number of firms, or a number of individuals, were incorporating not because it was the best thing to do but because it was being driven by tax advantages," he explained.
"What we did in the Budget was a balanced approach. We cut the main corporation tax rate, and in addition to that of course we've increased allowances, which small businesses will benefit from."
The trade and industry secretary pointed to the fact that many small businesses actually pay income tax rather than corporation tax, meaning they will "benefit" from the reduction in that form of taxation.
Speaking on BBC Radio 4's Today programme on Monday, Mr Darling said that a rise in the number of people incorporating strictly and solely for tax purposes made the move necessary.
"There was increasing evidence that a number of firms, or a number of individuals, were incorporating not because it was the best thing to do but because it was being driven by tax advantages," he explained.
"What we did in the Budget was a balanced approach. We cut the main corporation tax rate, and in addition to that of course we've increased allowances, which small businesses will benefit from."
The trade and industry secretary pointed to the fact that many small businesses actually pay income tax rather than corporation tax, meaning they will "benefit" from the reduction in that form of taxation.