Thursday, November 02, 2006

R&D Tax Credits - the truth

One of Labour's leading moans against the Tax Reform Commission's work will be the plan to get rid of R&D Tax Credits. The DTI's recent findings show that they are have not achieved their objectives, UK R&D spend, on a like for like basis is at 4% compared to 7% in the rest of the world and had actually declined in 2 of the years since Gordon introduced the credits.

Not only that but the main increases in R&D came in the Financial Services, retail and media industries. If Gordon meant these industries to be beneficiaries of the R&D tax credit then I'm a socialist. And the cause of the change, accounting standards, ie nothing has actually changed, its just balance sheet presentation.

If you look at the DTI scoreboard then on page 47 you can see that the UK has comfortably the lowest R&D as a percentage of sales of any major economy. The stats also show no evidence of R&D increasing more in the UK than elsewhere in the world.

That's not all. HMRC's latest Tax Bulletin indicated that 7 local centres were having to be established to deal with R&D tax credits. Why, can I suggest its because the rules are too complex for business to simply know if they qualify for benefits.

Brown should face the facts, he should abolish this relief as the TRC said. And cut the mainstream rate of tax, and the compliance burden, accordingly. If you want to really tackle the R&D crisis in the UK you need to rectify the comprehensivisation of UK education during my lifetime.

A bit too much self-promotion

Genuine quote from Councillor Coleman's latest newsofBrianletter:

Vanessa Feltz recently called him "One of the few politicians worth talking to"

The TaxCutter actually has some time for his GLA member despite such boasts. However, try the link to GLA Conservatives from the official Conservative Party website portrait of Brian. I don't think that's what was actually intended.