UK’s biggest businesses should be reinvesting, not plugging Treasury’s holes
So now we know: those with the broadest shoulders really are taking on their fair share of the burden.
This is hardly a surprise, of course, except perhaps to those who still pine for the Corbynista dream of taxing British business out of existence, but the PwC research in today’s City PM does at least confirm long-held suspicions.
The very biggest businesses across the UK are not perfect – but they are hugely, deeply valuable to the UK economy and to the UK at large.
At their best they demur from corporatism, innovate at pace, invest when they can and, though it’s unfashionable to say it these days, deliver on their most important duty: a return to shareholders.
Not all live up to those aims every day, but as employers, investors and anchor businesses for the UK’s cities they are and remain a force for good.
What is not, however, positive is the eye-watering tax rate that our biggest companies are forced to pay.
An effective bill of 53 per cent goes to the Treasury – compared to just 37 per cent to employees and salaries. Retained profits that can be used to reinvest or distribute via dividend accounted for just less than 3 per cent of the total value distributed from our biggest companies.
Even with our new normal of punishingly high taxes, imposed and collected by a Conservative government, that is madness. The largest companies in the UK contributed £77.1bn towards Treasury coffers, either directly or indirectly. Research and development spend? £9.3bn. For all the talk of encouraging investment, a phrase never far from government ministers lips, the raw numbers tell a very different story.
The Chancellor has a once in a lifetime opportunity between here and the next election; to back British businesses, free them up to invest and innovate, or to manage our decline into a sclerotic high-tax, high-spend, bureaucratic economy. He fluffed one chance in the recent budget; let us hope he takes the next one that comes along.