Biden’s global corporation tax plan is hugely popular, so why isn’t Britain backing it?
When something radical is proposed by an American president the idea stops being “leftwing” and soon becomes blindingly obvious common sense. Of course the world should agree a minimum corporation tax rate to stop a race to the bottom in which countries undercut each other, depriving themselves of tax revenues, needed now more than ever.
Never waste a good crisis: there’s no better time for change than following this global disaster when every country needs to repair its economy. Adopting a universal tax floor ends once and for all the scandal of tax havens where apparently respectable companies, pretending to all kinds of bogus corporate social responsibility, hide their money from the citizens that sustain them.
Joe Biden’s plan for an international agreement on a 21% minimum rate has gathered phenomenal support, including from Germany, France, Canada,
Italy and Japan. Ángel Gurría, the head of the Organisation for Economic Cooperation and Development (OECD), the club of 37 rich nations, says a “once in a lifetime” deal is within striking distance and could be signed this summer.
Here’s our national shame, yes, yet another one: Britain is the only G7 country not to back it. Yesterday, Labour tabled an amendment to next Monday’s finance bill demanding a review of the impact that applying this tax rate would have over the next few years. How much tax would it bring in, how much evasion and avoidance would it prevent, and what is the true size of the tax gap for the next two years?
The government will refuse, of course. The figures would be as embarrassing as Britain’s refusal to back the Biden plan. Here’s the puzzle: why should Boris Johnson and Rishi Sunak balk at this when they claim their own plan is to raise the UK corporation tax even higher, to 25% in 2023? It’s highly popular and it seemed one of the few measures that might give some substance to “levelling up” spending. Labour suspects, as do tax campaigners, that it will be quietly dropped under strong Tory business pressure. What other reason could there be for blocking a tax rise lower than the one they claim they will impose?
Here’s one clue. Answering questions for the government in the Lords, the Treasury minister Lord Agnew, gave the game away: “Lower corporation tax rates are broadly a good thing. Personally, I do not like to see tax on productive activity, employment or any of the