Truss condemns ‘global cartel of complacency’ for fixing tax rates
LIZ TRUSS will call the OECD a “global cartel of complacency” and warn its requirement for minimum levels of tax “damage the free world” in a major speech next week.
The former prime minister will call for countries to abandon plans for a minimum 15 per cent corporation tax rate for multinational companies and promise to set out her plan to lead a “battle of ideas” in the coming months.
Ms Truss, who stood down in October after seven weeks in Downing Street, has since formed the Conservative Growth Group of like-minded taxcutting Tory MPs.
She has criticised Rishi Sunak, her successor, for “detrimental” high taxes and voted against his Windsor Framework Agreement, which is designed to resolve issues with the Northern Ireland Protocol.
In a memorial lecture to Margaret Thatcher at the Heritage Foundation think tank in Washington DC on Wednesday, Ms Truss will turn her attention to a global tax pledge of almost 140 countries organised by the G20 and Organisation for Economic Co-operation and Development (OECD).
She will argue that the requirement for multinationals to pay a minimum of corporation tax prevents countries from competing with each other for corporate investment.
“Not content with high taxes in their own countries, we now see governments seeking to agree high taxes around the free world,” she is expected to say.
“I’m talking about the OECD minimum tax agreement, which will stop countries lowering things like corporation tax and becoming more competitive.
“It’s nothing short of a global cartel of complacency.
“I really worry that this agreement on high taxes – which is basically an agreement on high spending and low growth – will damage the free world collectively.”
Ms Truss, will also say that she cares “too much about this agenda to walk away” and pledge to oppose high taxes in a new “a fight back for freedom”.
During the Conservative leadership contest last August, Ms Truss’s allies suggested she would consider withdrawing Britain’s support for the minimum tax pledge and risking a diplomatic row with Joe Biden, who first proposed the idea.
The policy has become one of the “pillars” of an OECD agreement to force multinational firms to pay a “fair share”
‘I really worry that this agreement on high taxes will damage the free world collectively’
of tax. It gives governments the power to levy a “top up” rate of tax on corporations paying less tax in another jurisdiction, and is designed to avoid a “race to the bottom” between countries on tax rates.
The measures are backed by Emmanuel Macron, the French president, and Olaf Scholz, the German chancellor, and were agreed across the European Union in December, despite opposition from Poland. The agreement will come into force at the start of next year, including in the UK.
Ms Truss will use her speech to argue minimum rates of tax prevent Western democracies from competing with “our adversaries in authoritarian regimes,” including China.
“Low taxes, limited government and private enterprise were what won the Cold War.
“But the fact is that our economies haven’t been growing enough,” she is expected to say.
“The symptoms are low growth, rising living costs and declining value of wages. The disease is over-large Government. And we have to ask ourselves: are we still match fit to take on China and to take on the whole concept of state capitalism?”
Sources close to Mr Sunak have previously said that he has no plans to withdraw from the 15 per cent commitment.
In his Budget last month, Jeremy Hunt confirmed a corporation tax rise from 19 per cent to 25 per cent, which came into force last weekend.
Ms Truss pledged in her September “mini-Budget” that the planned rise would be cancelled, but was forced into an about-turn on the issue by MPs in her own party and concern from the financial markets.