28-08-2007
Tobacco corporations pay less tax than insurance companies
Of the total amount of corporation tax paid in 2005/06 by the 700 largest UK businesses, 2 thirds was contributed by the banking, insurance, oil and gas industries. The alcohol, tobacco, car and real estate industries contributed only a few hundred million out of £24.4 billion.
An official study by the National Audit Office analysed the tax contributions of 700 of the UK’s biggest businesses. It found that 220 of them paid no tax, and another 210 each paid less than £10m.
A low tax bill does not necessarily mean that a company has been avoiding tax deliberately. Low profitability, high financing costs and tax losses from previous years could all be factors.
However, the data raises questions about the strategies large corporations use to reduce their tax bills. Companies that pay large sums into pension plans receive tax rebates, and those that are highly geared are able to concentrate debt in countries where they can make the most of the tax relief on interest costs.
Taxes are inevitable, but you can get cheaper business insurance.
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