Corporation tax needs overhaul, says Lawson.
THE corporate tax system should be radically overhauled in the wake of the row over how much Google should pay in the UK, former chancellor Lord Lawson said.
He told the Telegraph that corporation tax has "had its day" and should largely be replaced with a tax on sales to prevent large-scale avoidance by multinationals.
Google has agreed to pay PS130m in back taxes covering the last decade, in a deal struck by HM Revenue and Customs and hailed as a "victory" by Chancellor George Osborne.
Mr Osborne argues that it was previously paying nothing and points to the introduction last year of a diverted profits tax to target companies which artificially shift revenues from Britain to countries with lower tax rates.
Critics, however, claim the internet giant was effectively paying just 3% tax and have called for the arrangement to be investigated by the National Audit Office and the European Commission.
Lord Lawson, chancellor in Margaret Thatcher's governments between 1983 and 1989, told the newspaper: "It is profoundly unsatisfactory that corporation tax has to be collected from multinational corporations by a series of ad hoc compromise deals.
"It is also grossly unfair on smaller businesses, who have to pay the full amount due."
"In the modern world corporation tax has had its day. It needs to be a much lesser tax, bolstered by a tax on corporate sales."