Tories pledge 3p cut in corporation tax

Gordon Brown today came under huge pressure to reduce the tax burden on British business after the Tories vowed to cut the headline rate of corporation tax.

Two days before the Budget, shadow chancellor George Osborne announced the Tories would cut the main corporation tax rate by 3p in the pound.

Appearing to steal a march on the Chancellor, Mr Osborne said the Conservatives would lower this rate from 30p to 27p.

The cut, which would cost around £4.5 billion, would be funded by ditching many of the capital reliefs in business taxes.

David Cameron and Mr Osborne's decision to announce the tax reforms now will fuel suspicions that they are trying to pre-empt a similar move to be announced by Mr Brown in his eleventh Budget on Wednesday.

" We're confident we can achieve this as part of a major reform of corporation tax," said the shadow chancellor. "This is an entirely self-contained, and self-financing, simplification of the business tax system."

Many company bosses are likely to welcome the Tory move, the party's first detailed tax pledge, as they have long complained that the tax system is far too complicated, adding to business costs.

They have also been warning that the tax burden is making it increasingly hard for British firms to compete against global rivals. Mr Osborne admitted, though, that some firms could be hit by the phasing out of the tax reliefs.

Mr Osborne shied away from bigger cuts in corporation tax which could be paid for by abandoning research and development tax credits.

Mr Brown is expected to announce a boost to Britain's science sector in his Budget, as well as possible changes to the welfare system and taxation of individuals and firms.