Ham­mond: Bri­tain will not cut taxes be­low Euro­pean av­er­age

Kuwait Times - - BUSINESS -

Bri­tain does not in­tend to lower taxes far be­low the Euro­pean av­er­age in or­der to re­main com­pet­i­tive af­ter Brexit but rather ex­pects to keep a rec­og­niz­ably Euro­pean eco­nomic and so­cial model, fi­nance min­is­ter Philip Ham­mond said. Ham­mond him­self had sug­gested in Jan­uary that Bri­tain may have to change its eco­nomic model to re­main com­pet­i­tive in the event that it left the Euro­pean Union with­out hav­ing se­cured an agree­ment on mar­ket ac­cess.

Ham­mond, who had cam­paigned for Bri­tain to re­main in the EU ahead of last year’s ref­er­en­dum, is seen as a pro­po­nent of a rel­a­tively “soft Brexit”, some­times putting him at odds with cab­i­net col­leagues who yearn for a cleaner break with the bloc.

Se­nior min­is­ters have given con­flict­ing sig­nals over key is­sues such as whether free move­ment of peo­ple could con­tinue af­ter Brexit, with di­vi­sions com­ing out into the open since the rul­ing Con­ser­va­tives lost their par­lia­men­tary ma­jor­ity in June. In an in­ter­view with French news­pa­per Le Monde pub­lished over the week­end, Ham­mond was asked whether Bri­tain would play the low-tax card to re­main eco­nom­i­cally at­trac­tive af­ter Brexit.

“It is of­ten said that Lon­don would con­sider launch­ing into un­fair com­pe­ti­tion in terms of fis­cal reg­u­la­tion. That is not our pro­ject or our vi­sion for the fu­ture,” Ham­mond was quoted as say­ing in re­sponse. “The amount of tax that we raise, mea­sured as a per­cent­age of GDP, is within the Euro­pean av­er­age and I think we will re­main at that level. Even af­ter we have left the EU, the United King­dom will keep a so­cial, eco­nomic and cul­tural model that will be rec­og­niz­ably Euro­pean.”

The com­ments were markedly dif­fer­ent from Ham­mond’s re­sponses in his Jan­uary in­ter­view with Ger­man news­pa­per Welt am Son­ntag, which were seen as a thinly veiled threat to use cor­po­rate tax as a form of lever­age in Brexit ne­go­ti­a­tions. Asked di­rectly whether Bri­tain would lower cor­po­rate tax, Ham­mond had said that while he hoped Bri­tain would re­main a Euro­pean-style econ­omy with cor­re­spond­ing tax and reg­u­la­tion sys­tems, it may have to change its model if it left the EU with­out agree­ment on mar­ket ac­cess.

“In this case, we could be forced to change our eco­nomic model and we will have to change our model to re­gain com­pet­i­tive­ness,” Ham­mond said. “We will change our model, and we will come back, and we will be com­pet­i­tively en­gaged.” In his Le Monde in­ter­view, Ham­mond was also asked to com­ment on the prospect of banks po­ten­tially mov­ing part of their ac­tiv­i­ties af­ter Brexit from the City of Lon­don to EU cities such as Frank­furt, Paris or Dublin. Ham­mond re­sponded that it would be “very dan­ger­ous for Europe” to frag­ment the fi­nan­cial ser­vices mar­ket based in the City, which he de­scribed as an im­por­tant com­po­nent of the Bri­tish and Euro­pean economies. “The big win­ner would not be Paris or Frank­furt, but New York. —Reuters

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