Financial Resolutions, 1978: Financial Statement, Budget, 1978. - Special incentive for manufacturing companies
Under a three year scheme introduced last year, manufacturing companies generally can enjoy a special 25 per cent rate of corporation tax provided that they expand activity to meet certain minimum targets. For 1977 these targets were an increase of 3 per cent in employment and an increase of 5 per cent in volume of sales over 1976 levels. I propose that for the remaining two years, 1978 and 1979, there will only be an employment target to be met. Manufacturers will therefore qualify for the special 25 per cent corporation tax rate for each year if they increase their employment by 3 per cent in each year. Credit for extra employment created over the target rate can be carried forward to the next year within the period of the scheme. In any case, all manufacturers will have the option of qualifying in 1978 and 1979 by reference to a 3 per cent increase in employment over the immediately preceding year, if that is to their benefit.
I trust that my simplification of the targets and my announcement now of the employment test for 1978 and 1979 will create a favourable climate in which manufacturers can plan ahead with confidence and so encourage early expansion of manufacturing activity and employment.