Osborne: We’ll revive economy by cutting business tax below 25p

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Firms will get less tax relief on their borrowings and be encouraged to issue shares to raise money. The rewards could be lower stamp duty on shares or a cut in the headline rate of corporation tax.

"By reducing the tax breaks for debt we could potentially fund a significant reduction in the headline rate of corporation tax — a key determinant of our international competitiveness," he declared to businessmen in Birmingham.

"I have already committed to reduce the headline rate from 28p to 25p by reducing complex reliefs and allowances, but we will need to go further if we are to keep pace with an increasingly competitive global economy."

Mr Osborne pledged a "considerable prize" with a simpler and more competitive tax system, encouraging jobs and investment.

British businesses must become less dependent on debt, he said. "This is already painfully clear in our banking industry. Economy built on debt has to give way to one built on greater ownership."

His speech comes after CBI director general Richard Lambert predicted this week that equity capital will play a more prominent role following the credit crunch.

Mr Osborne said the corporate tax structure had long favoured debt over equity by making interest costs fully deductible while taxing returns on equity. This had been exacerbated by Gordon Brown taxing pension funds dividends more heavily in 1997.

He promised the changes would be long-term to give businesses time to adjust. But a recession was "exactly the right time" to invest in new entrepreneurs: "It is start-ups not bail-outs that will drive our recovery."

The shadow chancellor also warned that Britons would have to tighten their belts to climb out of recession. "The truth is that Britain is going to have to work hard and save hard to get out of this hole. The Conservatives are ready to tell people these home truths, and the country is ready to hear them," he said.