Corporation tax cuts fail to create jobs, says TUC [View All]

http://www.guardian.co.uk/politics/2011/may/28/corporation-tax-tuc-job-creation

Lower corporate tax rates may not boost economic growth, a new report suggests, taking issue with a key principle at the heart of the Tories' economic policies.

The report, by chartered accountant Richard Murphy on behalf of the Trades Union Congress, suggests the correlation between lower corporate tax rates and higher economic growth is weak at best. "Low corporate tax rates reduce revenues, but fail to create jobs," the report says.

The conclusion is based on an analysis of the corporation tax rates of OECD countries between 1997 and 2010. "Analysis of the correlation between tax rates and growth in OECD countries (excluding the top and bottom outliers) finds that, at best, the relationship between the two variables is weak," Murphy concluded.

The coalition has cut the headline rate of corporation tax in order to boost growth. It was 28% when Labour left office and will reach 23% by 2013. In the last budget, the government said: "The reductions in the rate of corporation tax and healthy financial position of UK companies in aggregate should help support further investment growth."