The Government ought to abolish corporation tax for all of the UK’s small businesses - so says Lord Maurice Saatchi.
Writing in The Telegraph, the former Tory chairman has called on the current party leaders to “challenge cartel capitalism”. Now the chairman of the Centre for Policy Studies (CPS) think tank, the Iraqi-British politician, who co-founded the Saatchi and Saatchi advertising firm with his brother Charles, believes the move would “benefit everyone”.
To quote the crux of his argument, he wrote: “The policy, as I call it, would abolish corporation tax for 90 per cent of UK companies, reduce the deficit faster than predicted by the Office for Budget Responsibility, expand employment faster than it predicts, increase competition, challenge cartel capitalism and let millions of people grow tall.
“The nation as a whole will benefit from a change in culture as big as Right to Buy in the 80s; there will be greater economic growth and lower unemployment than currently forecast by the OBR, more competitive market places, and more freedom and independence.”
At present, small businesses pay 20 per cent of profits in corporation tax, generating £8 billion annually for the Treasury. By alleviating the fast-growing smaller companies from this financial burden there would likely be a rise in activity within the mergers and acquisitions market – namely because it would free up substantial funds that companies could channel towards inorganic growth, loosening economic shackles allowing them to become far more aggressive in their expansion strategies.
A report by the CPS to mark the think tank’s 40th anniversary also said that capital gains tax should also be abolished for all investors in small companies. Again, these measures to encourage growth and investment among SMEs would prove a valuable step in enabling a greater number of business acquisitions.
Whether Cameron and Osborne listen to Lord Saatchi's suggestions is yet to be seen, but it is another clear indication that the UK's financial focus is very much on the growth of its smaller businesses. 
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