Latest entry
- Business Editor Robert Peston
- 23 Mar 07, 10:36 AM
Prompted by some miffed small companies, I’ve made a few simple calculations on the impact of the Budget on the tax they pay. And I can see why some young and growing businesses are expressing their views of Gordon Brown in unprintable language.
Here are three examples. If you are a company that makes a profit of £250,000 per annum but invests next to nothing in general plant and machinery, then you will be £7,500 a year worse off as a result of the increase in the small company tax rate from 19% to 22%.
So far, so painful.
However, if you are the kind of business that invests in new plant and machinery every year, then you’ll benefit from the introduction of a £50,000 annual investment allowance available to all businesses regardless of size and regardless of their legal form. This allowance will mean that 100% of investment in equipment up to a ceiling of £50,000 can be offset against taxable profits.
So if you happen to invest £50,000 per annum, you should end up paying about £1,000 less in tax, as a result of the combination of the new investment allowance and the increase in the tax rate.
But vast numbers of small businesses invest nothing like that amount every year. So let’s assume you invest £25,000 per annum in such kit – which seems to me to be a more realistic figure – than you would be around £3,000 a year worse off following the Budget changes.
To be unfair to the Treasury for a moment, I am ignoring the increase in the enhanced deduction element of the small company Research and Development tax credit from 150% to 175%, because many businesses complain that they find it impossible to claim.
So what do I think about all of this?
Well I can understand the Treasury’s concern about individuals gaming the tax system and incorporating simply to reduce their personal tax and national insurance liability. So there is some logic to the tax hike, as a deterrent against incorporation by individuals who aren’t really running proper businesses.
But genuine discomfort will be caused to perfectly legitimate businesses – which seems an odd thing to do, given the years of rhetoric from Brown that small companies are the lifeblood of a growing economy.
Finally, I am uncomfortable about the Treasury’s attempt to compensate companies by effectively bribing them to invest through enhanced tax breaks on investment. If it does lead to incremental investment, much of that new kit will be unnecessary, white-elephant stuff, the equivalent of gold taps.
Ideally, investment should only be made following a hard-nosed assessment of whether the discounted cash-flow returns likely to be generated by the investment exceed the cost of capital. And a sensibly designed tax system shouldn’t distort that assessment.
Recent entries
- Economics Editor Evan Davis
- 22 Mar 07, 11:43 AM
The political debate on the Budget has quickly settled on one issue: did the chancellor try to sell his Budget as a tax cut when in reality it is not?
Yesterday, I said that he had not hidden anything: the fact that it was neutral was mentioned in the Budget speech, and the big tax rise was also there for all to hear.
But if didn't hide anything, he didn't quite highlight things either.
A casual listener yesterday could have been forgiven for thinking that it was a tax-cutting Budget in the way the chancellor delivered it. That impression might have been reinforced by his claims this morning that it is a tax-cutting Budget. The sheer importance of the abolition of the 10p tax rise - which is more or less a straight swap for the lower basic rate - might have been given more prominence in a speech that was not designed to disguise the true effect of the Budget measures.
Overall, in 2009/10, when most of the measures take effect, the Budget takes £125 million away from us. That's not a tax-cutting Budget.
The personal tax package - NI, income tax and credits - is a giveaway. But it's more of a giveaway because of the tax credit rises, than because of the income tax changes.
We'll get chapter and verse on all of this from the IFS later today, when they give us their post-Budget analysis at lunchtime.
But the chancellor can at least reject the idea that the Budget tax rises were hidden away in the small print. He did mention them in his speech.
Of course, the charge that Mr Brown is trying to con us is resonant because the Treasury has been less than open and objective in its presentation of the Budget in other respects.
Just three petty examples that sound small but which appear deliberate:
1. Listening to the speech, you would be left with the impression that child benefit was rising significantly. It was mentioned twice. The chancellor said: "I have focused support on families by raising child benefits and child tax credits..." In fact, no extra cash is scored to child benefit at all, as the real increase in the benefit only bites in April 2010. Despite the fact the chancellor said it grows in "successive stages".
2. The Treasury documents furnished us with examples of families which gain from the changes. But they could not - even when pushed - furnish us with an example of any family at all who loses. Even though their own analysis shows there are some. This could not be said to be unspun clarity of exposition in describing the effects of what was being proposed.
3. In his speech itself, the chancellor chose to mention the cash borrowing figures from 2006/7 to 2011/12. For that 2006/7 year, he could tell us that he was borrowing less than he thought back in November. But when it came to the more important measure of borrowing, the current balance, he missed out 2006/07, and gave us the data from 2007/8. Is it a coincidence that on that measure of borrowing, the 2006/7 data has turned out worse than it he'd told us back in November?
Looking back on it today, I know I made some arithmetic mistakes in the rush to produce post-Budget analysis. But it would be much easier for those of us covering Budgets if we didn't have to spend so much uncovering them first.
- Political Editor Nick Robinson
- 22 Mar 07, 10:18 AM
The morning after the night before how does the Budget look? Some talk of a tax cut, others of a tax con. Yesterday Gordon Brown was the political showman, taunting the Tories that his tax cut was bigger than theirs. Today he turned himself into the softly-spoken Chancellor committed to tax reform and finding a little bit of money when the national budget was tight to help families and pensioners.
Shorn of the theatre, the rabbits out of hats and the political positioning it is fair to say that this was a significant reforming budget. Cutting tax rates in the way that Gordon Brown has is a reform that the Tories have called for and would have wanted to do themselves.
So why such a mixed reception and why do so many appear to believe that it's a con (if, that is, the emails, comments and calls to the BBC are representative)? It's down - once again - to the way he chose to present it. And it's because he's got form. Brown almost mumbled his announcement that he was going to remove the 10p starting rate so few realised that he'd announced, in effect, an £8.5bn pound tax rise. So some who cheered his £9bn tax cut felt deflated when they learnt what had really happened.
Faced by allegations that what "the Gord giveth, the Gord taketh away," the Chancellor's felt the need to point out that he did spend £2.5bn pounds on higher tax credits for families and taking some pensioners out of tax. Paid for, mind you, by higher green and business taxes.
The key to Budgets though is what in them proves to be lasting. Gordon Brown's calculations were almost entirely political and almost entirely about stopping David Cameron in his tracks. When the Tories talk of tax cuts, he'll say "I've delivered the lowest income tax rate in 75 years". When they talk of hiking green taxes to pay for personal tax cuts, he'll say "I've done it". When they talk of family tax cuts, he'll say "I've done that too but without discriminating against unmarried people or those abandoned by their partners". When they talk of controlling spending, he'll say "I'm doing it".
Team Cameron's reply is that that's all fine. Far from being their winning card, the economy's proved to be a dud for the Tories in recent elections because they've looked like a dangerously risky option. If their spending plans are the same as Brown's and their tax plans only different at the margins, perhaps people will plump for shiny, new likeable Dave as against grumpy old Gordon.
Ah no, thinks Gordon Brown. His calculation is that his budget will make the Tory right more twitchy for bigger and bolder tax cuts; will narrow the George Osbourne's options for smaller, targeted tax cuts and leave them facing the need to promise to hike up green taxes in a way which will prove to be mightily unpopular.
Who's right? Wish I knew.
PS: Talking of grumpy Gordon wasn't it fascinating, if, at times, slightly excruciating listening to to John Humphrys ask him again and again if he was liked (hear the interview by clicking here). You sensed his awkwardness. You sensed him shrink physically at the need to engage with such questions. David Cameron and Tony Blair are showmen who are comfortable talking about themselves. Brown hates it. And can't quite bring himself to say "go hang, it doesn't matter if people like me or not".
Someone once told Margaret Thatcher that while research showed that the public didn't like her, it didn't matter, because it showed clearly that, most importantly, they did respect her. You know what? She never spoke to that person again.
PPS : The Tories have just gone personal.
The Shadow Chancellor George Osborne launched a scathing attack on Gordon Brown's style of leadership following the Budget. "Look no further than yesterday's Budget... stealthy, sneaky unable to tell the truth - he's not the man who can restore public trust in government because he's the reason people don't believe a word they say any more."
And David Cameron who normally steers clear of these things has joined in by saying: "I think Gordon Brown's problem is that he finds it hard to be straight with people. If he had stood up and said 'Money is tight so I'm going to simplify the tax system but cannot afford to cut taxes', that would have been one thing. But he did not. Instead he pulled an elaborate con trick. People will ask 'Can I trust this man as my prime minister?' and I think they will say 'No, we can't'."
Evidence that they're frit (to use the word Mrs T once used) and lack a policy critique of Budget tax measures they say they'll vote for? Or low political cunning? You decide.
- Business Editor Robert Peston
- 22 Mar 07, 09:42 AM
I felt almost nostalgic this morning when reviewing the Budget: it was very much in the tradition of Brown’s early Budgets and manifests the great paradoxes in his version of New Labour.
Here’s why:
1) Like those early Budgets, it imposed relatively tight constraints on public spending growth;
2) It was very good for the City, the creative industries and the service sector;
3) At best, it did nothing for Britain’s hard-pressed manufacturing sector and at worst it was harmful;
4) It was a reforming Budget in that it has undoubtedly simplified the personal tax and corporate tax systems (although much of what he proposes is simply a reversal of the tax-complexity of his own making);
5) It was rational, in aligning capital allowances with economic rates of depreciation;
6) It was tough on those individuals whom he perceives to be “gaming” the tax system, disguising themselves as small businesses (though in the process, he has probably hurt some proper small businesses);
7) It heaped its rewards on working families with children in the middle to low income brackets, took next-to-nothing from those on highest incomes, and contributed little to the childless at the bottom of the income scale;
8) He fudged the presentation of the Budget, in that he wanted it to be seen as both a serious reforming budget and a bribe to Daily Mail readers.
- Political Editor Nick Robinson
- 21 Mar 07, 05:48 PM
Hey presto! With the last announcement in the last minute of his last Budget speech Gordon Brown has sought to re-write the history of the Brown decade at the Treasury and to wrong-foot the Tories for the next decade.
This chancellor's been called many things - some good, some bad - but rarely has anyone called him a tax cutter or a tax reformer.
His hope is that today's speech will change that. No chance, say his enemies pointing out that what "the Gord giveth the Gord taketh away". And it's true that he had no money to spend today.
Had it not been for these tax changes we would have been focussing on the pain caused by the tightest public spending figures for more than a decade.
Instead Gordon Brown delivered a Budget that reminded me of the great pre-election tax cutting Budgets of old. A leadership election looms. Then, who knows, could he be tempted for an early dash to the polls?
- Economics Editor Evan Davis
- 21 Mar 07, 04:27 PM
One more thing about this budget... we shouldn't underestimate a significant point being reached: the alignment of the national insurance and income tax systems... under the old system, you didn't pay national insurance on income over about £35,000 a year. Then you started to pay top rate income tax on income over about £38,000. Now we know that the NI will stop where the higher rates starts.
It was a point that then shadow chancellor John Smith wanted to reach 15 years ago, going into the 1992 election. (People thought the idea lost Labour that election!)
In addition, we also lose the 10p band of income tax, so the tax system does look a bit simpler and more logical.
UPDATE 2100: One clued up reader points out that I'm wrong to say that Gordon Brown has done what John Smith proposed in 1992. Smith actually proposed scrapping the upper earnings limit on an employee's national insurance contributions, whereas Brown has just brought them into line with the top tax rate - a slightly different thing. I stand corrected.
- Economics Editor Evan Davis
- 21 Mar 07, 03:12 PM
1. There will be losers - even if we can't identify them easily, as it's a complicated package.
2. It is a watered down version of the Tory and Labour strategies for greenifying the tax system. By 2010, green taxes rise by £1.4bn, which is used to pay for other personal tax cuts. All three parties now have policies to take us in that direction.
3. It's a substantial budget. Many of the tax measures have been announced over a three-year period. There will be no need for the next chancellor to have a budget for a while!
4. It is the umpteenth budget in a row, in which the chancellor has had to confess that his public finance projections are worse than he thought they'd be! For yet another time, getting his key measure of borrowing - the current balance - into surplus has been postponed until next year. It always seems to be next year.
5. The spending side is tough, as expected. Gordon Brown will see spending grow at about 2% above inflation, instead of the 3.6% they've been used to in the last seven years. It'll feel like a cut.
6. The chancellor does now find himself reforming his own reforms of the tax system. The 10p income tax rate was his idea, he took credit for introducing it, and now takes credit for abolishing it and using the money to cut the basic rate of income tax.
Overall though, this was an ingenious and mega-package of measures, with huge political impact, that managed to use no new resources at all.
- Business Editor Robert Peston
- 21 Mar 07, 03:08 PM
There were howlers in my hastily drafted initial budget blog. Here is my more considered view with - I hope - fewer solecisms.
The big point is that the corporate tax reforms, including the changes to depreciation allowances, are good for most big profitable companies - especially those which might consider relocating to lower tax countries.
The reason is simple: they'll be paying two percentage points less of corporation tax.
But the changes to the allowances and also the increase in the small-company tax rate means there will also be losers.
A small company that invests a fair chunk of its profits will probably be better off. But those that don't invest will definitely be poorer.
Among bigger companies, any business with lots of hotels or industrial buildings or runways will lose, as a result of the abolition of the industrial buildings allowance
There's also a redefinition of what counts as fixed long-life assets and what counts as plant and machinery, to crack down on companies that obtain generous equipment allowances on fixtures and fittings in buildings.
Broadly, if a bit of kit is nailed down, it can no longer be classified as plant and machinery. So henceforth it will only obtain long-life asset relief of 10 per cent (which is being raised from 6 per cent) as opposed to the previous 25 per cent relief on equipment.
This is where it all becomes a bit complicated and involved. That 25 per cent per annum relief on investment in plant and machinery is being cut to 20 per cent. So any company that invests in lots of equipment will be hurt.
And, as I said, any company that has lots of buildings will be hit.
All of that doesn't sound like good news for BAA, or some transport businesses, or energy companies and utilities, or Network Rail or the Royal Mail (and in Royal Mail's case, that's a potential headache for Government, as its owner).
And my hunch is that BT will also be quite significantly hit.
But what the losers have in common is that it's rather harder for many of them to base themselves abroad for tax purposes.
The winners are those businesses with fewer industrial buildings or which have significant net cash flows, such as creative companies, banks, assorted financial service providers, other service companies, retailers, pharma and high tech.
For many of them, if the subscription price of being a member of the club of British companies - in terms of tax payable - were to become too steep, it would be relatively easy for them to emigrate.
Today Gordon Brown has cut that membership fee and hopes the likes of WPP, Vodafone, HSBC and Barclays can be persuaded to pay their reduced British tax with pride and enthusiasm (or at least not to do a runner to Dublin, or Amsterdam).
- Political Editor Nick Robinson
- 21 Mar 07, 01:55 PM
I'm feeling positively nostalgic. Today felt like one of those pre-election budgets in the Tory years where tax cuts were announced with a flourish. There is, though, no overall giveaway. This budget is revenue neutral. It cuts personal tax by around 2 and a half billion pounds - equivalent to about 1p off the basic rate of income tax - paid for by green taxes and tax avoidance measures.
And yet, the chancellor has done something that produced huge roars on the Labour benches and awkward gasps on the Tory benches. A headline cut in income tax (which the Tories have long dreamed of making) and a headline cut in business taxation.
Which election is Gordon Brown waiting for? The Tory leader joked that it was the leadership election.
This is the budget of a Chancellor with his eye firmly on moving to Number Ten. He felt under pressure to be seen to be heading off the challenges from David Cameron and, as a result, from the Blairite wing of the Labour Party.
Just one question - will it work?
- Economics Editor Evan Davis
- 21 Mar 07, 01:48 PM
This is a complicated package of national insurance and income tax changes - whopping changes in fact.
Gordon Brown has abolished the lower starting rate of income tax - 10p rate - that’ll raise him eight and a half billion pounds which he uses to cut the basic rate of income tax and this costs him nine and a half billion So, effectively he’s a billion adrift... This will have a huge political impact but it’s only cost him a billion pounds to cut the basic rate of income tax by two pence.
At the upper end, who's paying for it? Better off people, basically. He implements this alignment of the top rate of income tax with where you stop paying national insurance.
- Political Editor Nick Robinson
- 21 Mar 07, 01:31 PM
...we have the answer. Scrapping the 10p rate saves him 8.6 billion whilst cutting the basic rate costs 9.6 billion. Net cost around a billion pounds. How's that paid for - by scrapping empty property relief.
Clever hey?
- Political Editor Nick Robinson
- 21 Mar 07, 01:24 PM
And - hey presto - there's the rabbit out of the hat.
A 2p cut in income tax. Plus three billion more for families and pensioners.
The issue, of course, is how it's being paid for, as Gordon says there's no cut in taxation as a whole. My colleague Evan Davis is next to me checking the Red Book now to find out the answer.
- Political Editor Nick Robinson
- 21 Mar 07, 01:14 PM
Spending one billion pounds on increasing the Working Tax Credit will give more money to poorer families in work, will reduce what's called the "couples penalty" - the fact that there's a financial benefit to staying single.
- Political Editor Nick Robinson
- 21 Mar 07, 01:06 PM
Brown rejects "representations" i.e. Tory policy to tax domestic flights - as they would only achieve in a year what his Climate Change Levy achieved in a week.
- Political Editor Nick Robinson
- 21 Mar 07, 12:56 PM
Although the 2% cut in Corporation Tax is 1% less than the Tory promise this week neither plan involves an overall cut in business taxation. They involve restructuring the tax by cutting tax reliefs - the Tories all if them, Brown fewer of them.
- Business Editor Robert Peston
- 21 Mar 07, 12:52 PM
George Osborne will be feeling pretty pleased with himself, because the Chancellor’s plans to cut the headline rate of corporation tax and simplify the company taxation system bear a striking resemblance to proposals he announced on Monday.
Brown is cutting the headline rate of corporation tax by two percentage points to 28 per cent from April 2008. And he’ll recoup the cost of that by recalibrating a series of depreciation allowances (or changing the rates at which companies can offset the costs of the deterioration of assets against their tax charges).
For small companies, there’s a similar mix of positives and negatives. The headline rate of small company tax is going up from 20 per cent to 22 per cent. The reason is that the Treasury wants to stem the tide of individuals classifying themselves as companies to take advantage of the low small-company tax rate.
However, the Treasury is endeavouring to ensure that genuine small companies aren’t disadvantaged, by massively increasing the depreciation allowance on investment up to £50,000 per annum (which will apply to all companies, big or small). On up to £50,000 of investment, there’ll be an annual tax allowance of 100 per cent – which certainly looks very generous.
There will also be some big-company losers: the depreciation allowance for industrial buildings will be abolished; and there’ll be a crackdown on the way some companies classify fixtures and fittings in buildings as “equipment” in order to benefit from generous depreciation allowances.
However, the depreciation rate for so-called long life assets is going up from 6 per cent to 10 per cent. But the depreciation rate on short life assets is being cut rom 25 per cent to 20 per cent.
There’ll also be yet more tax incentives for research and development, with the tax credit for R&D going up from 150 per cent to 175 per cent.
All in all, I would expect big companies to welcome these measures. They will see it as a welcome attempt to restore the tax competitiveness of the UK, in the face of a worldwide downward trend for corporate taxes.
For small businesses, the reaction will be more mixed. Some won’t like the increase in their tax rate, but many small businesses may end up paying less tax thanks to the introduction of the more generous investment allowance.
The net cost of this corporate tax package looks broadly neutral to me – but I can’t yet be certain of that.
- Political Editor Nick Robinson
- 21 Mar 07, 12:48 PM
Gordon Brown's old friends "asset sales" (what Harold Macmillan once derided as "selling off the family silver") and "efficiency savings" are being used to try to get a lot politically when he only has a little economically to play with.
- Political Editor Nick Robinson
- 21 Mar 07, 12:36 PM
That's one tick on the checklist - a tribute to "the civil servants or should I say comrades" who helped with the Budget.
And so far no mention of Stalin.
- Political Editor Nick Robinson
- 21 Mar 07, 11:14 AM
Your handy budget check list for Gordon's last budget...
Rhetoric
• A gag about cuts to the civil service a day after the former head of the civil service laid into him
• No gag about Stalin who was, after all, a mass murderer
• No mention of 5 years plans
• Much talk about the economic success of the past 10 years
Shooting Tory foxes
• Announcement on cut to corporation tax rates as called for by George Osbourne
• More help for poorer families helping couples in particular
• Green taxes on gas guzzlers
Attempts to embarrass the Tories
• Rejection of "representations" to let families take only one foreign holiday a year
• Rejection of "representations" to give a tax break to married couples
Rabbits out of the hat
• A little something for pensioners
- Economics Editor Evan Davis
- 21 Mar 07, 09:00 AM
When I heard that the Lyons review was to be published today, I wondered whether they were trying to bury the Budget with the Lyons review, or bury the Lyons review with the Budget.
I think I know the answer. Whitehall loves reviews of local government - but hates them to go anywhere.
Indeed, a little known fact, the Lyons review itself was launched the day the last big review of council tax ended. Which was just ahead of the last election.
If politicians duck the issues of local government finance, it's because the public appear to scream more loudly when changes in council tax affect them, than with other taxes.
Which is a bit odd, as council tax raises less than 5% of the total tax take, and housing is not exactly overtaxed compared to other things we buy. And at least houses can't escape tax - we know exactly which council they sit in.
So why do we hate it? Probably because it's the only tax sent to us with an annual bill. So it's very visible.
Plus, having any tax on property allows newspapers to run lurid headlines - "Now they want to tax home improvements."... "They're taxing you for living in a good neighbourhood"… "They're taxing your beautiful view... "
Of course, taxing all these things that make up the value of a property, is kind of what property taxes do. But it sounds awfully unappealing.
But above all, we appear to dislike taxes that are not related to cash. We know we can pay income tax, cos it's taken out of some income. Or VAT, cos we're at the shops spending money. But council tax gets levied on people even if they have only a modest amount of cash to pay it.
This mostly affects elderly people living in large houses, and it's never seemed much consolation that they can trade down to smaller places, or claim council tax benefits.
So, for all these reasons, the unpopular tax gets ignored. In the hope it'll go away. We shy away from even having a revaluation, evidently preferring to not to tax your scenic view, but to tax the scenic view you had in 1991.
We're not alone: Famously, Ireland was using 100-year-old property values into the late 20th century. Holding out that long just makes the eventual revaluation all the more painful.
Which is why our local property tax in one form or another is reviewed, re-assessed, occasionally replaced, only to find itself back, and unreconstructed.
Can the Lyons review do any better than those that have gone before?
- Economics Editor Evan Davis
- 21 Mar 07, 07:33 AM
This is a more important Budget than usual.
Not just for the obvious reason, that it probably marks the end of an unprecedented ten year reign at Number 11. But also because it shapes the rest of the parliament. A three year comprehensive spending review is underway, and the chancellor has to reveal now the total amount the government intends to spend right up to 2011.
And all the evidence is that the squeeze starts here. Unless the chancellor wants a significant rise in taxes in the next few years, which he doesn't, the growth of public spending looks set to be held back, well below the growth rate of the economy.
In the Pre-Budget Report, Mr Brown pencilled in spending growth for the three years 2008/09 to 2010/11 of 2.0%, 1.9% and 1.9% respectively. He's bound to confirm figures close to that tomorrow, when the policy is set.
It'll probably feel like a cut in spending, certainly relative to the last few years.
It means that in his last Budget, the chancellor looks likely to revert to his earliest form - because before "Brown the munificant" handed out big doses of cash to public services, he was "Brown the Iron Chancellor", tough on spending. A form he is now trying to rediscover.
On one issue at least, Mr Brown will be able to make a boast. Over his ten years, he has met his famous Golden Rule, only to borrow for investment spending.
Sure, he wouldn't have met the rule without fiddling a bit with the timing of the economic cycle, (or without measuring his borrowing not in billions of pounds, but as a percentage of GDP, which gives more weight to the early years of surplus).
But at least he will be able to say that on his definition, over one complete economic cycle that coincides with his period in office, he invested about six billion more pounds than he borrowed.
Mind you: that is running it pretty close to the wire. Over the ten years he has spent 4.3 trillion pounds.
- Business Editor Robert Peston
- 21 Mar 07, 07:25 AM
Part of the background to today's Budget is a growing concern that businesses in Britain are paying too much tax and that the tax system here is a bit too complicated.
For example - and as I wrote here last night - it has emerged that the head office of the giant bank being created by the merger under negotiation between Barclays and ABN would be in the Netherlands.
That means that the new superbank would probably be registered for tax purposes in the Netherlands, which over time would lead to quite a significant loss in tax to the Exchequer.
Now Barclays is being careful to say that the decision hasn't been taken. And it is very keen not to lay into the chancellor at this delicate juncture.
But accountants tell me that it would be mad not to base itself in the Netherlands, because the tax advantages would be huge.
So part of what the chancellor will attempt to do today is restore the competitiveness of the UK in a tax sense.
According to the CBI, in 1997 the UK had the third lowest rate of corporation tax among the 15 countries which were then members of the European Union.
At the time, Gordon Brown took very public pride in cutting the corporation-tax rate.
However the headline corporation tax rate has been unchanged at 30% since 2000, while other countries have been cutting their tax rates.
Today, the UK's corporation tax rate is the seventh highest among the current 27 members of the EU.
It's important not to overstate the gravity of our fall down this league table.
The tax rates of some of our very biggest competitors remain higher than ours, as does the actual burden of taxation (which includes the impact of all taxes on companies, not just corporation tax).
The Treasury for example is keen to point out that the UK still has the lowest rate among the G7 leading global economies. And for example the tax burden on companies in Germany and France remains significantly higher than it is in the UK.
But the trend, of the UK becoming less competitive when it comes to company taxes, is clear and unambiguous.
Among the chancellor's great obsessions of the moment is that the British economy mustn't become less competitive at a time of intense worldwide competition for the best jobs between countries.
I therefore expect him to announce measures in the Budget to lift Britain's position in the league table of tax competitiveness.
That could mean that the rate of corporation tax would be cut over time - and almost certainly that steps will be taken to reduce the complexity of the tax system.
If he does do that - and as I say, the odds of something happening in that direction are high - the shadow chancellor, George Osborne, would be able to do the "I-told-you-so" dance.
On Monday, he urged the chancellor to cut three pence off the headline rate of corporation tax, funded mainly by a streamlining between the allowances the tax man gives companies for wear and tear or depreciation of physical assets and the rate at which companies in practice write off those assets.
Osborne's suggestion highlights perhaps the most important constraint on Brown's tax reforming ambitions. The chancellor simply doesn't have the money available to cut taxes unless he can boost revenues to the Exchequer in other ways or cut outgoings.
So whatever he does would probably be a long term process. And it would be funded by constraining the growth of public spending or finding compensating revenues.
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