Pharmaceuticals: a Jewel in the Crown
This week George Osborne presented his Budget statement to the House of Commons amidst much speculation on the future of the 50p tax rate for top earners. But he did give something to industry by cutting Corporation Tax this year and the next. The next day GlaxoSmithKline announced that it will be investing 500 million in the UK including 100million into two manufacturing sites at Irvine and Montrose. The company will also be building a new factory at Ulverston in Cumbria. These investments could potentially create over r 1000 new jobs both north and south of the border.
No doubt there are sincerely held arguments on both sides as to whether the 50p tax rate should be cut to 45p or not. I hold the view that his priority should be helping industry create more secure jobs and start the long haul of getting the 2.67 million unemployed back into productive work. The above announcement is a shot in the arm for the UK pharmaceutical industry and demonstrates why the overall tax regime must be competitive versus the rest of the world. On that issue, I do agree with the Chancellor.
The pharmaceutical industry employs over 72000 people in the UK including many highly qualified scientists and doctors. It has also become a major export earner for this country with exports of medicines exceeding imports by 7 billion in 2009. The industry also sustains thousands of jobs in other areas and invested 4.4 billion in research and development, without which the sector just could not thrive and succeed.
Apparently, Glaxo will begin building the plant in 2014 which could take 6 years to finish. The company has also acknowledged the Chancellor's announcement that he is introducing a so-called patent box, under which firms pay a lower rate of Corporation Tax on profits derived from UK owned intellectual property. This is crucial to a sector such as pharmaceuticals that has to spend huge sums in research and development to fund new drugs.
If we desire to improve GDP growth in the years ahead, we must encourage inward investment like this to sustain and create highly qualified jobs. This should be the aim of central government across all parties, not just giving a tax break to the rich. It must be said that George Osborne has at long last hit the tax loophole where anyone can buy an expensive home through a company for the purpose of avoiding Stamp Duty.
Mark Sandford - Permission granted to freely distribute this article for non-commercial purposes if attributed to Mark Sandford, unedited and copied in full, including this notice.
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