Newspaper article The Evening Standard (London, England)

Second Thoughts on Tax Cuts Trim Footsie Gains; MARKET ROUND-UP

Newspaper article The Evening Standard (London, England)

Second Thoughts on Tax Cuts Trim Footsie Gains; MARKET ROUND-UP

Article excerpt


THE City initially welcomed the Chancellor's decision to reduce corporation tax by 2p in the pound to 28p in 2008. But investors quickly realised that, as with all Budgets, the devil is in the detail and that was enough to temper their enthusiasm and cut short the celebrations.

Number crunchers were quick to point out that, to help pay for it, Gordon Brownwas raising the tax rate for smaller companies earning up to [pounds sterling]300,000 this year from 19% to 20%.

Business has been concerned for some time about the growing exodus of multinationals from the UK because of the growing tax burden and more attractive tax regimes in other European countries. A genuine cut in corporation tax should have helped counter this.

Share prices generally had earlier rallied from opening falls and by the time the Chancellor stood to make his last Budget speech, the FTSE 100 index was 31 points higher 6251.3. Within minutes of having made known his proposals for corporation tax, it touched 6287.5, but later saw its lead reduced to 31.7 at 6252.0.

Turnover was described as light and opening falls on Wall Street ahead of tonight's decision on US interest rates by the Federal Reserve also helped dampen sentiment.

The Dow fell 20.70 to 12,267.40.

Brown's decision to maintain the bio-fuels differential at 20p per litre until 2010 turned out to be good news for alternative fuel producers.

Biofuels Corp rose 334p to 1512p and D1 Oils put on 6p at 150p.

A penny on a pint of beer and cider and 5p on a bottle of wine may be bad news for drinkers, but the brewers and pub chains thought they had got off lightly.

Mitchells & Butlers fell 5p to 782p but JD Wetherspoon put on 1612p to 75212p and Greene King added 16p to 1140p. Fag duty went up by 11p a packet, but the cigarette producers have other things on their minds at the moment.

Imperial Tobacco, which is faced with raising its offer for Spanish rival Altadis, rose 9p to 2259p. …

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