George Osborne told to halve corporation tax In last year's Budget, George Osborne, the Chancellor, pledged to cut the main rate of corporation tax to 23 per cent from the current 26 per cent by 2014, the lowest rate in the G7 group of leading economies. A report by the think tank, however, argues that the Government needs to take a more drastic approach, reducing it to 20 per cent in this year's Budget. Companies have spare cash, which could be directed towards infrastructure and other projects, but "also need the confidence to invest." Tim Knox, director of the Centre for Policy Studies, said: "Profitable businesses are the only source of a viable economic recovery, the Chancellor should reduce the rate of corporation tax in the 2012 Budget - and also announce his intention to reduce it even further to 15 per cent or even 10 per cent once the appropriate anti-evasion measures are in place." The research adds: "The UK is facing the possibility of a double dip recession. Demand in the economy is weak. Business confidence is low. Politicians of all parties are looking for ways to encourage growth. Bold steps should be considered. The Treasury expects corporation tax to generate £43 billion in revenues this year. The Centre for Policy Studies estimates that reducing corporation tax to 20 per cent would see the Treasury lose £4 billion in revenues, but the cost would be offset by enhanced growth. The think tank says that in 1982-83 corporation tax was 52 per cent and yielded 2 per cent of GDP, compared with 2011-12 when the 26 per cent rate yielded 2.8 per cent of GDP. If the rate were to be cut to 10 per cent as proposed it would be among the lowest on offer in the world. Ireland has attracted big businesses by offering a main rate of corporation tax of 12.5 per cent. However, the country has come under pressure from other eurozone members to raise the rate to help reduce its deficit and reliance on international bail-out funds.