THE BUDGET

Corporation tax will be lowered from 30p to 28p next April - the first time the business levy has been reduced since 1999.

Corporation tax rates for small firms will rise to 22 pence, higher than the basic rate of income tax

The income tax cut is smoke & mirrors because the increase in getting rid of the 10p low rate exactly matches what we save with 2p off.

I have been calling for cutting corporation tax cuts to Irish levels of 12.5% for Scotland & also for the UK. Cutting 2p to 28% is a very small step but it is at least in the right direction even though there is at least half a step back in raising it for small business.

All in all no significant change.

Brown should have cut corporation tax by 3p, not increased the small business rate & made a specific promise that any increase in the amount raised by CT would be returned in further reductions. That would have cost very little more & had a significant role in improving growth as it would have established a virtuous circle of declining business costs. This would be in line with the Laffer curve predictions by economist Arthur Laffer.