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Osborne to slash corporation tax to less than 15%

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Chancellor George Osborne is to cut corporation tax from 20 per cent to less than 15 per cent in an attempt to win back investors’ business confidence following the Brexit vote.

Osborne says Britain must show the world it is “still open for business” and outlined a new five-point plan to build a “super competitive economy” with low business taxes and a global focus, the chancellor told the Financial Times.

He says: “We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt.”

The sharp cut in the levy will bring the UK close to the 12.5 per cent corporation tax rate currently applied in Ireland.

Other plans include a new push for investment from China, ensuring support for bank lending, focusing on investments in the Northern powerhouse and maintaining the UK’s fiscal credibility.

Last week, the chancellor abandoned his target of turning the UK’s budget deficit into a surplus by 2020 because of the expected “negative economic shock” for the UK after the referendum result.

Osborne says the UK is facing a “very challenging time” and urged the Bank of England to do whatever it can to avoid “a contraction of credit in the economy”.

The BoE will publish the results of its Financial Policy Committee meeting on Tuesday.

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 4th July 2016 at 9:49 am

    One of the biggest challenges ahead is the EU’s vindictive threat to impose punitive trade tariffs (in effect sanctions) if the UK refuses to retain its open door policy on migration. That’s tantamount to declaring that although it can’t stop us leaving it will do everything it can to force us to continue to abide by all its rules and regulations. Not a nice organisation of which to be a part.

  2. Fine and dandy as long as the corporates pay 15% on *all* the profits made in the UK and don’t ‘spirit’ it away to Luxembourg etc.

  3. I own up. I couldn’t have been more wrong. I thought that Corporation Tax would rise.
    OK so we have a problem. How will they fix it? Three choices as I see it:
    1. Other taxes to rise? Income tax will be unpopular – so more stealth tax? Fiscal drag. More paying 40%?
    2. More austerity – or some of the above with some of this?
    3. Just borrow more and put us deeper into debt? Why not? Let the next generation pay. You have already thwarted their wishes by Brexit so you may as well further ruin their future.
    Doing nothing will not be an option. All the talk of saving fortunes when we leave doesn’t seem to be materialising does it?

    • Could it be…. the country may save a substantial amount of money, by not shipping it over to Brussels ?

      Could it be…. that new trade links have opened and other countries are actually coming to us ?

      Could it be….. the treasury is getting behind the UK businesses existing and new because at the end of the day it will create more revenue ? lets face it 15% of £100,000, is still better than 20% of £50,000

      Could it be… that London is leading the way, so Scotland and Ireland may rethink life could be better out of the EU ?

  4. The EU will act on the basis of self interest. If we have been so stupid as to vote Leave then what do you expect of the EU? It is in their interests to destroy our economy.

  5. “Could it be…. that new trade links have opened and other countries are actually coming to us ?”
    What is this nonsense? Germany is in the EU and quite evidently hasn’t got a trade problem. In deed if you care to examine the figures you will see that they sell more to the Commonwealth then we do.

    Indeed even Italy exports more than we do. So what makes you think that now we are on our own the world will flock to buy the few things we actually have to export?

  6. Paolo Buco nel Terreno 4th July 2016 at 3:42 pm

    lower CT also provides greater opportunities for businesses to employ more people which means less claiming benefits (a cost saving for the exchequer) and get more IT and NIC from that employee and employer (more income for the exchequer) thus a smaller loss for the exchequer than the 5% figure suggests.

  7. On refection it seems to me atht the three options I mentioned are going to be avoided if at all possible, so how to square the circle. The annoucemnt of the proposed reduction of CT gives us a clue. We will become a tax haven. I can see certain possibilities to attract business to the UK:

    1. Non dom deposits will be scrapped
    2. The high tax rates will be reduced to try and prevent our banks and financial services from leaving, as well as encoraging other high earners and their companies to stay.
    3. Dis incentive to foreeign nationals to buy expensive houses and the high rates of stamp dutry may well be changed. This might just hold up the housing market, which no Government can afford to see in decline. Not a good prospect for those on the ladder, but what alternatives?

    Any outcry by the less well off will be easily countered. “OK – so see the better off leave and we will have to raise taxes and increase austerity – which do you prefer? The rich getting richer or you getting poorer?

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