Albert Edwards, the Global Strategist for the French bank, Société Général calls on the Tories to increase rather than cut corporation tax. He refers to the latter idea as ‘laughably stupid’.
However, Edwards (contrary to the MP Liam Fox call for company tax cuts in next month’s Budget to boost economic growth) said taxes should be pushed higher as firms are not spending the surpluses they are already sitting on.
“Why do I regard the idea of cutting UK company taxes as laughably stupid at this time? It is simply the fact that UK corporations, like their US counterparts, are sitting on piles of excess cash with very little evidence they want to either spend or distribute these surpluses,” he said.
“It seems totally senseless to boost profits still further by lowering taxes in the hope that they will spend this on hiring and investing. If they had wanted to do this, there is most certainly no shortage of funds.
“Indeed, if the government really does want to reduce its bloated budget deficit, and if as appears to be the case, the UK (and US) corporate sector cannot find useful things to do with its cash mountain, they should be relieved of this troublesome burden via higher, not lower, corporate taxes.”
He also suggested a one-off levy on excess cash piles could be applied to corporates.
Much more on this here.