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Tax business turnover, not profits

“A simple, fair and productive way to tax UK business”

2. How does it fit with Compass’ core beliefs of equality, solidarity, democracy, freedom, sustainability and well being?

Abolish corporation tax. Instead, make all UK businesses pay an ad valorem tax on their UK turnover, at lowest possible rate. (Optional lower rates for small/medium businesses). Abolish all special reliefs. Result - a fairer, simpler business tax system to replace the present complex, arbitrary, unequal system which has made taxation voluntary for large, multi-national companies.

3. How does it build the institutions of social democracy, like social groups and collective and cooperative forms of ownership and control?

Simplicity and fairness in the tax system are essential building blocks of social democracy.

4. How much will it cost or raise and where will any cost come from?

The simplified system should yield great administrative savings to the tax authorities and business alike (although there will need to be special arrangements for intra-group transactions to prevent a build-up of cascade tax). The yield will depend on the rate chosen - but tax base will be much greater than corporation tax (all businesses trading in UK, not just those in profit).

5. Which groups in the electorate are likely to support or oppose this measure? Is there any polling evidence you have on this?

Loss-making businesses will complain at paying tax. Answer - they do this already, through VAT and uniform business rate. (And loss-making businesses use public services as much as those in profit). Profitable businesses could get big tax reductions and small/medium businesses could gain. All businesses gain from simplicity of new system.

6. Is there a place or country where it’s worked? Please provide some information.

Not to my knowledge. This is a fundamental change.

7. What are the three main arguments in favour/against it?

Fairness and simplicity. Present complexity helps big businesses who can afford smart accountants.

Greater ease of collection and certainty of revenue. Far harder for businesses to reduce or conceal UK turnover than profits. Attacks tax evasion by multi-nationals.

Economic efficiency - no penalty on businesses for being profitable and elimination of incentives to business to make decisions for tax reasons.

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