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Think tank wants further corporation tax cuts in upcoming Budget

The Chancellor George Osborne is being urged to consider further cuts to corporation tax in a bid to boost economic growth.

The Centre for Policy Studies is calling on the Chancellor to slash corporation tax to 20% in this year’s Budget, claiming that it is the ‘only source of a viable economic recovery’.

‘A cut in the rate to 20% would be a quantum leap towards encouraging the enterprise economy which this country needs. It would be a wake-up call to business both domestic and international. It would also be a significant simplification of the tax system,’ it said.

In the 2011 Budget Osborne revealed that the main rate of corporation tax would fall to 26% for the financial year beginning April 2011, and to 25% for the financial year beginning April 2012.

This is due to be followed by two further cuts, to take the main rate to 23% by April 2014.

However, the Centre for Policy Studies has warned that a more ‘dramatic’ approach is required, and even suggests that corporation tax should be cut to just 10%.

Tim Knox, director of the Centre for Policy Studies, said: ‘Profitable businesses are the only source of a viable economic recovery, the Chancellor should reduce the rate of corporation tax in the 2012 Budget — and also announce his intention to reduce it even further to 15% or even 10% once the appropriate anti-evasion measures are in place.’

The research adds: ‘The UK is facing the possibility of a double dip recession. Demand in the economy is weak. Business confidence is low. Politicians of all parties are looking for ways to encourage growth. Bold steps should be considered.’