Tuesday, November 30, 2010

ZenTiger Tax Drugs

George Osborne took the first step to make Britain a more business-friendly country yesterday by announcing changes to corporation tax designed to reverse the trend of companies moving overseas to escape punitive rates and red tape.

Mr Osborne announced that a new 10p rate for corporation tax would be introduced on profits generated from new products generated and developed in Britain . That was immediately followed by an announcement that GlaxoSmithKline would, as a result of the change, invest £500m in the UK.

Given the immediate announcement by Glaxo, this move can hardly have been a surprise to them. In the midst of slashing government spending in one area, only to increase it in another area, these talks of low corporate tax rates seem to be a mere distraction. After all, they have just instituted a 50% tax rate for high earners and the VAT (GST) rate goes to 20% in January 2011.

The only thing that appears to be off the table in these discussions is the size of government. Or have I missed something sensible?

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