Chancellor Told to Cut Corporation Tax 
A leading think tank has claimed that corporation tax should be halved in an effort to boost business and revive Britain’s economic growth.

The Centre for Policy Studies has urged the Prime Minister, David Cameron and the Chancellor, George Osborne, to cut corporation tax to as little as 10% because it’s the only source of a viable economic recovery.

During the budget last year, George Osborne pledged to cut the main rate of corporation tax to twenty-three percent from its current twenty-six percent by 2014; the lowest rate in the G7 group of leading economies.

However, a report by the think tank argues that the government needs to take a more drastic approach, reducing the corporation tax to twenty percent in this years budget.

The report states: “A cut in the rate to 20 per cent would be a quantum leap towards encouraging the enterprise economy which this country needs.

“It would be a wake-up call to business both domestic and international. It would also be a significant simplification of the tax system.”

The Centre for Policy Studies also says the tax cut is the only source of viable economic recovery since households and individuals are too indebted to expect consumers to lead a rescue of the economy.

Director of The Centre for Policy Studies, Tim Knox, said: “Profitable businesses are the only source of a viable economic recovery, the Chancellor should reduce the rate of corporation tax in the 2012 Budget — and also announce his intention to reduce it even further to 15 per cent or even 10 per cent once the appropriate anti-evasion measures are in place.

“The UK is facing the possibility of a double dip recession. Demand in the economy is weak. Business confidence is low. Politicians of all parties are looking for ways to encourage growth. Bold steps should be considered.”

The Treasury is expecting corporation tax to generate £43 billion in revenues this year, whilst the report estimates that reducing the tax to twenty percent would see the Treasury lose around £4 billion which would be offset by enhanced economic growth.

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Taxman Extends Deadline 
HM Revenue and Customs have announced that taxpayers will now have an extra two days to file their online self-assessment tax returns, after industrial action threatened to disrupt their call centres on January 31st.

HMRC said it will not be issuing penalties to anyone who files their tax return on February 1st or 2nd. Equally, those who have tax to pay will not face any interest on payments made on February 1st or 2nd.

Stephen Banyard, HMRC's acting-director of general personal tax, said: “We have always been very clear that we want the returns - not the penalties. For that reason, we do not want anyone who cannot get through for help and advice on 31 January to be disadvantaged in any way.”

The extension by the tax authority is an acknowledgement that planned strike action by HMRC staff on deadline day will cause shortages, which will in turn have an impact on taxpayers who have queries about their tax returns.

Exchequer secretary to the Treasury, David Guake, said: “This strike could have caused thousands of people to incur fines, so I am pleased that HMRC has taken this common sense approach.

“The Government does not want anyone trying to file their tax return on time to be unfairly penalised because they were unable to get through for help and advice on deadline day.”

HMRC had previously announced that taxpayers who could not get through to the call centres would have to write to their tax office pleading that they had a "reasonable excuse" not to have filed their tax return.


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Raise Tax Threshold Further and Faster 
Deputy Prime Minister, Nick Clegg, has urged the coalition government to go “further and faster” in raising the level at which people start paying income tax, to £10,000 a year.

Currently, the level at which earners start paying income tax is £7,475, with the government looking to raise it to £8,105 this year; with the promise of raising the threshold to £10,000 by the next election which is set for 2015.

However, Nick Clegg has argued that many families are already at financial boiling point and need more relief.

During a speech to the Resolution Foundation think tank, Mr Clegg will call for urgent reforms to the tax system so that it rewards ordinary taxpayers and helps drive growth.

Mr Clegg is set to tell the think tank: “These families cannot be made to wait. Household budgets are approaching a state of emergency, and the Government needs a rapid response.

“These families have seen their earnings in relative decline for a decade, compared to those at the top. That has accelerated since 2008, with lower real wages and fewer hours at work.

“Every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?

"There is now an urgent need to give families more help, an urgent need to rebalance our tax system so it rewards work and encourages ordinary people to drive growth."

Nick Clegg’s call to the government comes following news that the economy shrank by 0.2 per cent in the last three months of 2011.

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UK Could Save £4 Billion a Year 
A study by Open Europe has suggested that Britain could save over £4 billion a year by taking back control from the European Union for the country’s poorest regions.

The study has found that during a seven year period, which ends next year, Britain will have paid almost £30 billion into the EU’s ‘structural and cohesion funds’ targeted at Europe’s poorest areas; but they’ll have received under £9 billion back.

According to the study, for every pound which the Treasury contributed, seventy pence is spent elsewhere in Europe, twenty-five pence returns to the same region and five pence is redistributed between the richer and poorer regions in Britain.

Whilst the study concludes that there is a strong case for richer EU countries to continue to subsidise poorer ones, it also states that large savings could be made if Britain managed its own regional policy.

The author of the study, Pawel Swidlicki, has called for the government to revive a previous British demand for reform by which EU members would pay for their own regional funding, with Brussels spending limited to countries that have less than ninety percent of the European average income.

Mr Swidlicki said: “This could save the UK up to £4.2bn. If this money was re-invested in the UK regions, along with the amount that is currently spent via the EU, the receipts of each UK region should increase by around forty-five percent compared to the amount of grants they currently get.

"The coalition should match the pledge made by the previous Labour government and seek to bring regional policy back to the UK. The economic, social and democratic arguments clearly point in favour of this policy option."

The European Commission, which administers the EU regional policy has challenged Open Europe’s figures, saying: “We don't know what these calculations are based on.

"Last year 271 regions, including 150 in richer countries, signed a letter supporting EU funding amid concern that national policies would see cuts to spending. Having an EU policy is crucial to realise a consistent regional policy of getting investment into poorer areas.”

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UK Debt Passes £1 Trillion Mark 
According to the latest figures from the Office of National Statistics, the government’s debt has passed the £1 trillion barrier for the first time; despite a bigger than expected fall in borrowing throughout December.

The latest figures, which are officially released on Wednesday, show public sector borrowing – excluding financial interventions such as bank bailouts – fell £2.2 billion to £13.7 billion last month, a bigger fall than the City’s estimate of £14.9 billion.

The bigger than expected fall in government borrowing during December was partly offset by a £1.3 billion increase in estimates for borrowing between April and November after local government spending was revised upwards.

However, the report shows that the fall still wasn’t enough, with the net debt rising to £1,003.9 billion (64.2% of the GDP) and the highest since records began in 1993.

Despite the figures increasing, the Chancellor, George Osborne, is still on track to hit a target set by the Office for Budget Responsibility to reduce the UK’s borrowing to £127 billion in the financial years – despite fears the UK is on the brink of recession.

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