‘Lame-duck’ Osborne sets out plans to cut corporation tax to 15 per cent
GEORGE OSBORNE was accused yesterday of turning Britain into a “rainy Dubai” after revealing plans to slash corporation tax to just 15 per cent.
The Chancellor has claimed that Britain must become a “super competitive economy” to survive after Britain leaves the European Union.
Millionaire Mr Osborne, who could benefit from lower tax as a shareholder of his family’s wallpaper business, told the Financial Times the cut was needed to prove Britain was still “open for business.”
But opposition parties said the Tory was using the result of the referendum as cover to complete his long-running bid to turn Britain into a tax haven.
Labour shadow chancellor John McDonnell said: “This is a futile and costly gesture from a lame-duck Chancellor who is clean out of ideas after being forced to abandon his failing flagship austerity programme.
“Instead of turning the whole country into a giant tax haven and playground for the ultra-rich, the Chancellor needs to get a grip on the real problems by reversing planned cuts to government investment and bringing forward shovel-ready projects for those areas worst affected by the investment slump and the shock of Brexit.”
Mr McDonnell also suggested that sparking a race to the bottom with European neighbours “undermined” negotiations on Britain’s exit from the European Union.
Britain’s corporation tax rate has been cut from 28 per cent to a historic low of 20 per cent since the Tories took power in 2010.
And the Chancellor gave his second successive bung to big business in his latest Budget in March, announcing a cut to 17 per cent by 2020 at the cost of £1 billion to taxpayers.
That would already leave Britain with the lowest corporation tax rate of any country in the G20 group of economic powers.
Slicing it further to just 15 per cent would put Britain well below the European average of 20 per cent and EU average of 22 per cent.
Only Ireland, Bosnia, Bulgaria and Gibraltar have lower tax rates, while Albania, Georgia, Latvia and Lithuania all charge 15 per cent.
Green MP Caroline Lucas said: “Leaving the EU must not be used as an excuse to make Britain into a tax haven for corporations.
“Reducing tax receipts yet further means less money available for our economy as a whole. That means less to spend on hospitals and schools and less to invest in the communities that have repeatedly been left behind.”
Lib Dem Treasury spokeswoman Susan Kramer said the plan would increase alienation that fuelled the vote to leave the EU.
“Brexit cannot be used by George Osborne as yet another excuse to cut taxes that disproportionately benefit the biggest businesses,” she said.
“Britain will not thrive by simply turning our country into a rainier Dubai.”
Tax expert Richard Murphy warned cutting corporation tax again would increase both tax avoidance and increase inequality.
“Those who can exploit this to avoid tax will be, by definition, those in the wealthier part of the population,” he wrote on his blog.
But he added that Mr Osborne’s plan was the “last desperate” gesture of a Chancellor who is unlikely to survive until the next Budget.
“Without any indication as to when this will happen it is virtually meaningless,” he wrote.
“It is also something of a hollow gesture when the chance that Osborne will be Chancellor in September looks to be very remote indeed.”