The British Treasury is considering making permanent a temporary tax break designed to spur business investment, according to the boss of telecoms giant BT, who said such a move would be a game-changer.
Finance Minister Jeremy Hunt will next week outline his plans to lift the economy from anemic growth, which has been held back by, among other things, weak business investment since the vote to leave the European Union.
In recent years, the government introduced two tax relief programs to boost business spending, but while they were well received, employers complained that they did not allow them to make business decisions about long-term investment.
BT’s outgoing CEO Philip Johnson, who used the plans to accelerate the rollout of a fiber broadband network, said making the tax breaks permanent would improve the UK’s investment climate.
“I know the chancellor (Hunt) is considering this option for next week’s fall report,” he said in a blog post expected to be released later Thursday.
“He said he wanted to take this step when economic conditions allowed. With billions of pounds of potential investment at stake, it’s important to ask whether, as a country, we can afford not to.”
No final decision has been made, but extending the program would cost about 10 billion pounds ($12.40 billion) a year, a government source said.
BT, the country’s biggest telco, said Britain had suffered from a lack of investment by businesses in recent decades.
He said its £15 billion investment to bring fiber to 25 million premises would take at least 10 years to generate a return on investment.
It accelerated its rollout in 2021 after the government introduced a “super-deduction” that offsets investment through tax. This measure was replaced by the full credit policy, which expires in March 2026.
Mr Hunt’s options are limited after the state’s high cost of dealing with the coronavirus pandemic and rising energy prices last year. Public debt today represents nearly 100% of economic output, three times what it was 20 years ago.
Business leaders hope the program will become permanent rather than extended. “The real game-changer is to make these tax breaks permanent,” BT’s Johnson said.
($1 = 0.8066 pounds) ($1 = 0.8065 pounds) (Additional reporting by Elizabeth Piper and Andy Bruce; Writing by Susan Fenton)
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