Tax competition

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Earlier this week the CBI said that UK companies are planning to flee the UK because of our increasing tax burdens. John Christensen and I have replied in the letters page of the Guardian.

The data we have used is all derived from UK national statistics and data published by HM Revenue & Customs. It is consistent with data used by most economists who work in the taxation area, and shows that against expectation government corporation tax receipts are not falling significantly. But it offers an explanation which I have not seen offered at any conference that I have attended on this issue. Our data shows that profits as a share of GDP are rising, and that constant tax revenues are happening only because tax paid as a proportion of profit is falling as fast, if not in proportionate terms faster, than profits are rising.

The outcome is simple. UK companies aides are getting all the benefits of operating in a vibrant economy, stimulated by tax spending but want to pay nothing towards the benefit they obtain from doing so. They do instead wish to pass that burden to others, and governments such as those in Jersey and Ireland are happy to assist them to do so.

There is, therefore no economic substance to what the CBI is saying. The substance in their argument is greed. And that is the antithesis of corporate responsibility.