Last week at a fringe meeting at the Tory conference, Brexit Secretary Dominic Raab told Brussels that the UK will slash Corporation Tax in the event of a ‘No Deal’ on the exit from the EU.
The Labour retort ‘it will turn Britain into a tax haven for the super-rich’ omitted to say, that it would also give the UK a competitive advantage for businesses like Amazon, entrepreneurs and the work force in Britain.
Raab’s comments were independently endorsed by Sajid Javid, the Home Secretary, who said, that if the UK could save on its divorce bill from the EU, he would choose to use the money to cut taxes – alleluia!
Javid went on to say ‘We are taxed enough as it is. Give it back to the people’. He went on to say, that post Brexit, it would be possible for the UK to look at some of its rules and regulations ‘currently in place to make the UK a more attractive jurisdiction’ in which businesses will want to invest.
Jeremy Corbyn’s stock answer is ‘the Conservative’s Brexit plans would turn the UK into a low tax, low regulation ‘Singapore-on-Thames’ in a bid to undercut the EU! – Brilliantly put – yes, precisely. What is wrong with a bit of healthy competition? The EU has always been envious of the position of London on the global financial stage – well with lower taxes it will become even more attractive.
The idea, put forward by Javid to slash corporation tax rate to 10% is very attractive. Both Ireland and Cyprus, which are within the EU are at 9% and both jurisdictions have seen a boost to their economy. Setting the rate at 10% would be just above the lowest acceptable rate in the EU, but would nevertheless make the UK most attractive.
As Thatcher proved, slashing taxes makes more money – not less – why, because if the tax rates are too high, people change their behaviour to avoid it, but when the tax rate is ‘acceptable’ – businesses and people simply pay it rather than avoid it.
Numerous islands; the Channel Islands, the Caribbean Islands, and Singapore as well as land locked countries like Switzerland have proved that changing laws to make their jurisdiction attractive to people and business is good for the economy and everyone living there.
Set out below are my top four suggestions of what a Government should do – post Brexit.
First; make sure that non doms are encouraged to bring their wealth into the UK rather than benefit from leaving it offshore, this could easily be done, with relatively few tweaks. It is a nonsense that we encourage rich people to live here, but to leave their wealth offshore.
Second, I would want to see the UK become a financial centre for trusts. The UK was the founder of trusts, but because they are now so heavily taxed there are very few in the UK, they are managed and resident in offshore financial centres – not the UK. This is business which belongs in the UK, but we would need to upgrade our trust laws to make the UK attractive. The UK, has fallen woefully behind the nippy offshore financial centres in trust laws. All that Britain would need to do would be to decide which were the best laws and simply follow them. Of course, my own legislation in the Bahamas – the Executive Entity Act would be the at the top of my wish list for new trust laws in the UK!
Third, I would want to see Stamp Duty on homes slashed. Of course, I have sympathy with the fact that people working in London, cannot afford to live here, but piling on the taxes; ATED, stamp duty, capital gains tax and inheritance tax, simply dries up of the market at the upper end, signalling that the UK does not want to attract rich foreigners to live here. With a buoyant upper end to the property market, which is now totally stagnant, the country would see a resurgence of all businesses which depend on market movement; estate agents, architects, interior designers, plumbers, electricians, decorators, and numerous other industries. What people want who work in London is not a price fall on mansions they could not afford to maintain but new affordable homes, where they can work as well as live.
Fourth, I would slash inheritance tax. Forty percent tax on your estate on death is a penalty for saving which cannot be good when the population is aging and everyone should be encouraged to save for their old age, not squander it – probably abroad so as to avoid having too much to pay to HMRC. Tax on death is a penalty on saving, this message needs to be made, loud and clear.
This is my top four – but I have plenty more suggestions if anyone is listening! If you agree or disagree – I would be delighted to hear from you.
Garnham has written two books ‘When you are Super Rich who can you Trust?’ and ‘How to win business from Private Clients’ which can be bought on Amazon or direct from www.garnhamfos.com, and if you want to contact her for an appointment call 020 3740 7422 or e mail on caroline@garnhamfos.com