Chancellor George Osborne has pledged to cut corporation tax below 15%, to encourage businesses to continue investing in the UK, in an effort to give the economy a post-Brexit boost.
In an interview with the Financial Times he said: “We must focus on the horizon and the journey ahead, and make the most of the hand we’ve been dealt” .
The Chancellor didn’t specify a timeframe for the rate reduction, but insisted Britain must “get on with it” to reassure investors that they should continue doing business with the UK.
He had previously announced plans to lower the corporation tax to below 17% in 2020 from the 20% current rate. Further tax reduction would lead to competing with tax haven countries, such as Ireland.
Shadow Chancellor, John McDonnell, told the BBC that the proposal was counter-productive, and the tax cut would not create the business investment that the UK needed. He also said it “was not constructive” to be “offering up Britain as a tax haven” to Europe, and warned this could hit taxpayers .
Chas Roy-Chowdhury, Head of Taxation at the Association of Chartered Certified Accountants, noted that large changes to tax policy could leave the UK out of step with the EU, complicating the Brexit negotiations and making global reforms more difficult .
The move also has the potential to rile the general public, given the recent controversies over tax deals struck with multinationals, such as Google.
- (1) – George Osborne puts corporation tax cut at heart of Brexit recovery plan – Financial Times
- (2) – Brexit: George Osborne pledges to cut corporation tax – BBC News
- (3) – Will Osborne’s plan to cut corporation tax help boost the post-Brexit economy? – Telegraph