I have long argued that George Osborne and the Conservatives have had the aim of making the UK a tax haven. Even the FT agrees after yesterday's cut in the corporation tax rate to 18%:
George Osborne's trademark historical reference in this budget was an old RAF bunker whose restoration he will fund. The chancellor may need that bolt-hole. Cutting corporation tax to 18 per cent by 2020 will be seen as an act of economic warfare by some in the US, Germany and France, where headline rates are 30 per cent or above. A barrage of criticism of the UK as a tax haven will probably ensue.
That criticism will be justified. What is happening is that the UK is blatantly trying to ensure that profits are artificially relocated to the UK to enjoy a lower tax rate here than they would elsewhere. And if that is not tax haven behaviour it is hard to say what is.
In the year when Magna Carta is celebrated the rights of the City of London, enshrined in clause 13, appear to be at the heart of UK tax policy, as they always have been. It's a woeful basis for an economic policy. It contravenes all that the OECD Base Erosion and Profits Shifting process is about. As a way of undermining global economic stability it is a sure fire winner.
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KPMG list the EU average corporation tax rate as 22.15%. Alas, they don’t give a breakdown of the averages for countries with large financial services industries and those without, but I suspect it’s lower for economies heavy on banking and because they are more mobile the pressure is on Osborne to bring it down.
just curious though. In your opinion are there any sovereign nations which are tax havens which are basket case economies now, and which is the worst?
Your question makes no sense
KPMG average includes tax haven states and is unweighted so nonsense
I can make an average for EU member states weighted by GDP, and one for for tax haven members versus non-tax haven members. Which ones are you defining as tax havens though?
Use the TJN listing
But what are you trying to prove?
But you don’t use the TJN listing for the Fair Tax Mark.
Why not?
Yes we do, quite explicitly
I’m trying to check if it can be said that the UK has a high corporation tax by the standard of countries with big financial service sectors relative to GDP. Cyprus, Ireland are both lower than UK. IoM and CI also.
Compared to European countries with bigger manufacturing bases the tax is of course low as you imply.
The obvious motivation for Osborne to bring corp tax down is not to attract new companies to come, but rather to make sure that the existing ones stay ( Standard Chartered and HSBC have been suggested as potentially leaving London ).
The UK has very high property and land costs and attracting new investment is increasingly hard especially in the South East. There was a study done of Enterprise Zones ( which are a variation of tax havens as there are tax advantages ) which showed that the tax kick-back made very little difference, it was the ease of planning that provided the boost to GDP.
( http://www.theworkfoundation.com/assets/docs/publications/283_Enterprise%20Zones_24%20Feb_FINAL.PDF – says “The relaxation of planning regulations offered by Enterprise Zones is also much more cost effective than tax breaks” ).
Time will tell if the new government intends to lift some of our most stifling planning restrictions, but imv this corp tax change is about benefitting existing business, not attracting new ones.
OH I see. HSBCC is going to move to Cyprus or Jersey
You really are in cloud cuckoo land
I’m not claiming HSBC will move to Jersey. And Cyprus is a basket case with imports four times exports and a horrible external debt that will need rolling over in the next 2 years.
Asia is a far more realistic place for HSBC to go to but they are now less likely to consider it.
Anyway, I checked the Tax Justice Network site and it doesn’t match the narrative here. They say “There is no generally agreed definition of what a tax haven is. The term is a bit of a misnomer. . .” This means anyone making claims about tax havens needs to explain them. For TJN the worst jurisdictions are the secrecy jurisdictions with SWI (corp tax 17.92) and LUX (29.22) being the worst offenders in the EEA. Unless there are plans to increase secrecy in the UK, what Osborne is essentially doing can’t be described as making the UK a tax haven based on what the TJN say. It would be better to call this ‘tax competition’ or simply lowering tax.
Given I created the definition of a secrecy jurisdiction I know all that
I also created the first FSI
I use the term secrecy jurisdiction for tax haven rather as a bird watcher uses a common name rather than the technically correct scientific one
You still have no argument
The end game with this is that the rate of corporation tax will be reduced bit by bit, little by little, so that this tax falls below the horizon.
Arguments can be mounted that it doesn’t collect much tax and can therefore be abolished.
The new tax rates proposed on dividends add fuel to this fire…
The tedious SAID BS Ideologues will then get their way!
This is inevitably what is planned
You are right about Said
The discussion point imv is your claim that the corp tax reduction shows that Osborne wants to turn the UK into a tax haven and to get businesses to relocate here.
I’ve put up evidence that you need to get businesses to relocate you need to relax planning. And taken evidence that you worked from the TJN on that to make the country into a tax haven you would need to make it more secretive as this is the headline feature of a tax haven. I can’t see any evidence from Osborne of increasing secrecy this week. In fact you’ve given evidence this week that Osborne is taking forward one of your ideas on tax transparency.
In the absence of any other evidence all we can say is that we have a tax cut intended to keep UK tax competitive.
I have to say that not a single intelligent commentator – and I would start from the FT – would agree with you
Sorry, but if you think that was an argument you’re wasting your time and mine
I’ll try and ask the question another way then.
What’s the best piece of news or evidence you have from the beginning of this month that Osborne is trying to make the UK a more secretive jurisdiction?
I said a tax haven
18%
Sometimes rates matter
Here it does
The fact there is no universal definition of a tax haven unlike an secrecy jurisdiction does not mean one can’t be identified
You have posted for the lost time. I find neoliberal pedants defending tax abuse very, very boring
Entertain this question if you have time:
Shortly Northern Ireland and Scotland will be setting their own corporation tax rates. It looks likely they will choose a number the same or lower than the rate for England and Wales, but let’s also assume they will meet the highest standards in the world for openness and transparency.
Let’s say they also want to avoid the accusation from you of going down the tax haven road. What % number should they choose?
The question makes no sense
As usual