(17865) Dd.145178 400m 5/73 G.W.B.Ltd. Gp.863
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CONFIDENTIAL
7. But would not the local community regard a tax rate of over 20% as out of the question?
This is a matter for judgment, but yes, probably (taking into account the reference in the Despatch to the paramount need to maintain business confidence). There may be a psychological advantage in keeping the rate below 20%: a higher rate could lead to the belief that taxes on profits would be increased still further, to totally unacceptable levels, to finance what might be viewed as an inexorable growth in expenditure. It could also lead to widespread evasion. The last increase in the stan- dard rate, of 21 percentage points, from 121% to 15%, represented a rise of 20%. It might be thought that a similar rate of increase (20%) would be the most that could safely be imposed in the foreseeable future. This would imply a maximum rate of 18% (an increase of 3 percentage points on 15%).
CONFIDENTIAL
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