Chancellor George Osborne has pledged to cut corporation tax to encourage businesses to continue investing in UK, reports Asian Lite News
The chancellor has said that he would reduce rate of the corporation tax to below 15% – some 5% lower than its current 20% rate, which would give the UK the lowest corporation tax of any major economy.
Osborne is reported to have said that the cut was part of his plans to build a “super-competitive economy” with low tax rates. A treasury spokesperson was quoted as saying said they did not know when the cut would happen. In March, the chancellor had said that corporation tax would fall to 17% by 2020.
Mr Osborne has said that it was important for “Britain to “get on with it” to prove to investors that the country was still “open for business”.
But his declaration invited flak from sceptics in the financial world.
Shadow chancellor John McDonnell was quoted as saying that the proposal was “counter-productive”, and that the tax cut would not create the business investment that the UK needed. He has said it was “not constructive” to be “offering up Britain as a tax haven” to Europe and warned this could hit taxpayers.
Mr McDonnell accused the chancellor of being “chaotic” by bringing in “panic tax cuts” and instead called for a “steady strategy”. He also warned that it was not the right way to open negotiations to get the best deal in Europe.
Former World Trade Organization chief Pascal Lamy was quoted as saying that Osborne had to consider what the EU would think. He told the BBC the chancellor’s plan would be seen as in effect the start of Brexit negotiations, and starting with tax was not the right way to go about it. Lamy was reported to have said, “The UK is already activating one of the weapons in this negotiation, which is tax dumping, tax competition. Osborne has to think about the impact of this on the continent. This will be seen on the continent as the start of the negotiation.”
Lamy emphasised that in the EU negotiations, starting with the tax competition is not the right way.