George Osborne has told the Financial Times that he wants to set the lowest corporation tax rate of any major economy, announcing “a target of 15%”. The current rate is 20%. The paper reported that:
[Osborne] said Britain should “get on with it” to prove to investors that the country was still “open for business”.
The FT added that before the EU referendum the chancellor had “threatened to make £30bn of tax rises or spending cuts” in a post-Brexit emergency Budget:
He is now striking a more cautious note, awaiting official forecasts before announcing any new measures in the Autumn Statement.
The FT also noted that the move could alienate some voters, and Labour’s shadow chancellor John McDonnell has tabled an urgent question for today, 4 July, on the corporation tax proposal.
The Times called in a leading article on 30 June for the UK to “steadily lower corporation tax to 10%”. A front page leader in The Sunday Times of 3 July outlined a “blueprint for a post-Brexit Britain” including “a 10% target for corporation tax and abolishing the 45% top income tax rate, paid for by streamlining the tax system and abolishing unnecessary reliefs”.
Tax justice campaigner and barrister David Quentin said today he was “astonished” to see that Paul Mason, economics editor at Channel 4 News and a Labour party member, is calling for corporation tax cuts. Mason told the BBC’s Newsnight on 1 July (35 mins in) that “we should slash business tax and boost business investment”. Quentin said the idea was “completely the opposite of what anyone advocating for greater equality in the UK or globally should be calling for”.
What do accountants and tax professionals think of this? Reuters has noted that the idea of further cuts “has been raised by some accountants and policy experts”. But the news agency went on to report that ACCA’s head of taxation, Chas Roy-Chowdhury, agreed with an OECD analysis (according to the report) that the UK could pay a high political price if it were to slash corporation tax.
Reuters quoted Roy-Chowdhury as saying that:
… if the UK did try to offer tax rulings or introduce tax incentives that were contrary to the EU’s rules against unfair tax competition between members, it could actually put companies off due to worries about retaliation.
No doubt I’ve seen only a small proportion of tax professionals’ tweets on the subject in the last day or so, but these two – from Heather Self of Pinsent Masons, and Jonathan Riley of Grant Thornton, are particularly interesting.
As I have reported at Tax Notes (paywall), MPs approved last week a planned cut in the rate of corporation tax to 17% from April 2020.