New analysis from the Prosperity Institute has revealed that President Donald Trump’s proposed tax cuts could cost the UK £18 billion as businesses will flee to America.
Trump’s tax cut plans will effectively see investment leaving the UK and heading to America as business tax here in Britain is capped at 25%.
Trump could reduce US corporation tax to14% which is below the OECD rate and investors will flock to America and dump the UK.
The Prosperity Institute said, “If the United States government cuts US corporate tax to 14%, one point below the OECD’s minimum threshold of 15%, this would give the United States an 11 per cent tax differential over the UK, whose corporate tax rate is currently 25%.
“We predict a reduction of up to £18.2 billion in foreign direct investment from the USA to the British economy between now and 2030-31.”
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Emmanuel Igwe and Jordan McKittrick, economists at the Prosperity Institute said, “Without embracing competition, the UK will find itself potentially losing business to its largest trading partner, as more American money is reshored.
“This is a risk that the UK can scarcely afford to take, considering the state of public finances and the economy.
“The ability to set tax rates is fundamental to any nation’s sovereignty. While corporation tax is just one item in a nation’s toolbox, alongside regulatory reform, energy policy, labour laws and others, it is of fundamental importance.”
A Treasury spokesman said, “Our competitive tax system is just one way we are going further and faster to kick-start that economic growth.”
They said that corporation tax will remain at 25%, this is “the lowest in the G7.”
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