Clause 54 - Charge and main rate for financial year 2002
Finance Bill
6:45 pm
Miss Melanie Johnson (Economic Secretary, HM Treasury; Welwyn Hatfield, Labour)
If the right hon. Gentleman keeps intervening, he will make it much harder for me to do so.
The profits limit was mentioned. A company will get the full benefit of the small companies rate on profits of up to £300,000, but raising the profits limit, so that a company would benefit from the small companies rate on profits of up to £1.5 million, would benefit a relatively small number of businesses. It would not target the smallest companies, which we are keen to ensure are fully supported. The right hon. Gentleman also mentioned projections and forecasts in the Red Book. On page 196, at paragraph C 44, there is a projection of non-North sea corporation tax profits and the expected revenue. Profits are projected to rise by a further £1.5 billion in 2002 and then to fall by almost £0.75 billion in 2003-04. So there is a projection, despite the right hon. Gentleman's suggestion that there is not.
We are again setting the main rate a year in advance, to give notice to the small minority of companies that would otherwise have to pay one or two instalments of tax before the rate was set. I return to the point that I made a few minutes ago—that is all about helping British companies to plan ahead and know where they will be and creating a framework that provides stability and certainty. Once the transition to instalments is complete, our cuts in the main rate of corporation tax will have benefited large companies by more than £3 billion a year.
Our policy is to promote enterprise by keeping corporation tax low. That allows companies to make long-term investment decisions with confidence and to increase the post-tax returns on investments. Conservative Committee members appear to be objecting to the level of revenue being received, but that is largely a result of the fact that, having cut the corporation tax rate, we are benefiting from the fact that British industry is doing so well at present. Internationally competitive rates of corporation tax also help to maintain this country's position as an attractive location for inward investment. I strongly commend the clause to the Committee.
Question put and agreed to.
Clause 54 ordered to stand part of the Bill.
Clauses 55 and 56 ordered to stand part of the Bill.
Further consideration adjourned.—[Mr. Allen.]
Adjourned accordingly at Seven o'clock till Tuesday 1 May at half-past Ten o'clock.