In his first major interview since the Brexit result, the UK Chancellor George Osborne has said he plans to slash corporation tax to below 15% in bid to encourage companies to continue to invest in the UK. At present, corporation tax in the UK stands at 20%, already one of the lowest of any major global economy; it was due to fall to 17% by 2020. Before the vote Osborne had warned that he would have to raise taxes and slash spending in a bid to balance the books by 2020 if the UK voted to leave the EU, however he has now abandoned that target saying the government had to be "realistic about achieving a surplus by the end of the decade".
Hinting about his role after the upcoming conservative leadership race, Osborne said he wanted to play a leading role in shaping the UK economy, saying he wanted to build a “super competitive economy with low business taxes and a global focus”. In addition to his tax cut pledge, Osborne also set out plans to push for new investment from China, including an extended state visit, as well as seeking a range of bilateral trade deals with major global economies.
However, a word of warning has come from Pascal Lamy, the previous head of the World Trade Organization. Lamy said the announcement on corporation tax was in fact the start of the UK’s Brexit negotiations and that this was the wrong way to go about it. Lamy said "The UK is already activating one of the weapons in this negotiation, which is tax dumping, tax competition. I can understand why he (Osborne) does that, because obviously investors are flowing out from the UK, and he wants to provide them with some sort of premium that would make them think twice before they leave the United Kingdom” adding "And I'm quite convinced that at the end of the day, if you want a proper balanced win-win relationship in the future, starting with tax competition is not the right way psychologically to prepare this negotiation."
Also cautioning of the consequences of the chancellor’s planned direction was the head of tax at the Organisation for Economic Co-operation and Development, stating that whilst understanding the fallout from Brexit “may push the UK to be even more aggressive in its tax offer” aggressive steps in that direction would effectively turn the UK into a tax haven type of economy.