The case for keeping business taxes low

Why should business pay tax at all? That’s a provocative but forlorn question to ask in Budget week. Business pays corporation tax on profits because that’s what voters expect, partly because many are conditioned to believe profit is a sin and partly because all would prefer to pay less tax themselves. Investors pay tax on capital gains because — as the American bank robber Willie Sutton said of his crimes — that’s where the money is. And companies pay more tax as business rates on premises because that’s the easiest way to collect contributions towards public services from which they benefit — but it’s also an easy levy to relieve at times, like now, when the private sector needs help.

Those are the principles with which the Chancellor was wrestling last weekend, while on one side business lobbyists urged him to rely on a rocket-shaped recovery to rebalance the public finances and on the other, Lords Clarke and Hague declared tax rises, corporate and personal, to be the only righteous path.