Chancellor Jeremy Hunt has admitted that UK business taxes are too high but insisted the best way to lower them would be to expand the economy.
Hunt defended the decision to increase corporation tax to 25 per cent in the last Budget, arguing that lowering the burden previously had not yielded the hoped-for increase in business investment.
“The tax burden is too high, we would like to bring it down,” he said at the government’s Business Connect forum in London. “The way we will bring the tax burden down is though growth.”
He also pushed back on calls to introduce shopping that was free from value added tax in the UK after bosses including Burberry chair Gerry Murphy used the event to call on the government to match the tax regimes of other European countries to boost tourist spending.
The chancellor said the government “would not wait” for the CBI, the employers’ organisation, to work through its problems as ministers sought to use the event to rebuild relations with bosses.
The government has cut its involvement with the CBI since a scandal hit over alleged rape and other sexual misconduct charges, which has led to an exodus of its members.
Hunt said there was no point in engaging with the CBI since its members had “deserted them in droves”. But he added that he hoped there would be an independent business group to represent wider industry in future, without specifying if this should be the CBI.
He also said business optimism was returning, saying that the government was “winning the argument” about its ability to create the right conditions to invest.
After a “bumpy period” last year, chief executives had told him that stability had returned, he said.
The chancellor said the event had attracted about 60 per cent of FTSE 100 bosses.