Government accused of making UK less competitive for businesses
The ABI has accused the Treasury of focusing on short term protection of its revenues at the expense of maintaining a competitive economy.
Writing for Insurance Times, the ABI’s assistant director of financial regulation and taxation, Sarah Knight, called on the Treasury to consider the implications for insurers when introducing new taxes on foreign profits.
She said: “The acknowledgement by the Chancellor of the need to engage more closely with the insurance industry was a step in the right direction. The foreign profits consultation would be the test of how far in practice the government was willing to go to construct a competitive UK tax system that would provide for a modern and increasingly globalised industry.”
Knight accused the government of making the UK less competitive for businesses. She said: “There are a number of areas where a burdensome tax regime can impact on commercial decision making. Insurers need to hold capital to secure their liabilities – a basic regulatory requirement. If the tax regime creates complex barriers restricting what companies can do with that capital, it causes problems.”
Chancellor Alistair Darling appeared at an ABI board meeting last month to discuss the insurance industry’s ongoing concerns around several areas of tax. As well as lobbying over the foreign profits tax, the ABI has repeatedly called for corporation tax to be lowered from its current level of 28%, and for further tax breaks for businesses.
The insurance industry recently won a place on the government’s new tax forum, with AXA UK chief executive Nicolas Moreau taking one of the 14 seats.