Commenting after the Conservative Party had announced plans to cut tax on business, Grahame Smith, Scottish Trades Union Congress (STUC) General Secretary said:
“Given the rapid onset of recession, it is entirely legitimate for political parties to be examining the potential role of fiscal policy in stimulating economic activity. Although last week’s massive cut in interest rates is a necessary condition for economic recovery, it is unlikely to prove sufficient.
“The STUC will continue to argue that UK’s taxation framework requires a radical overhaul: it is simply unacceptable that low paid workers pay a higher percentage of their income in taxation than the super-rich. The prodigious success of UK corporations and super-rich individuals in avoiding and evading taxation must also be addressed as a matter of urgency. HMRC estimates that the current tax gap could run as high as £40bn a year.
“Therefore, it is crucial that any short-term measures designed to mitigate the impact of recession should also help contribute to a fairer and more efficient taxation system. Tax cuts should be focused on the lowest paid who can be relied upon to spend the savings.
“Tax cuts for businesses are not the way forward. There will be little or no stimulatory effect on the economy within the necessary timescales if at all and the deadweight costs are potentially enormous.”
ENDS
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