Friday 9 December 2016

EU's Moscovici doubts Osborne will go through with corporation tax cut

Published 05/07/2016 | 08:29

European Economic and Financial Affairs Commissioner Pierre Moscovici. Photo: Reuters
European Economic and Financial Affairs Commissioner Pierre Moscovici. Photo: Reuters

EU Economic Affairs Commissioner Pierre Moscovici said this morning that Britain's plan to cut corporation tax to less than 15pc was a bad idea and he doubted it would take place.

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Chancellor George Osborne announced the planned cut on Monday in an attempt to cushion the shock of Britain's vote to leave the European Union. It would intensify competition between Britain and Ireland for coveted foreign direct investment.

"Dropping to 15pc doesn’t look to me like a good initiative to be getting involved in ... , and that would be a considerable loss of receipts for the British Treasury at a time when there is already a deficit that is much too high in Britain," Moscovici told Radio Classique in France. He said the move would also amount to fiscal dumping.

"So yes, at this point it doesn’t seem to me like the right plan, and I don’t think it will be George Osborne who goes ahead with it ... Let's be watchful but let’s not be excessively worried.”

Osborne gave no target date for the cut. He had previously said he would cut corporation tax to 17pc by 2020 from 20pc now. The average rate among the world's most developed countries is 25pc

Britain is due to have a new prime minister and government by September, once members of the ruling Conservative party have elected a new leader to succeed David Cameron.

Ireland currently has a low corporation tax rate of 12.5pc.

Reuters

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