Monday, January 03, 2011

The kids have been given the key to the tuckshop

The Conservative-led British government has created a Business Forum on Tax and Competitiveness. Take a look at its membership and you will see the forum is dominated by major British companies and their lobbies, including the Confederation of British Industries and the Oxford Centre for Business Taxation (the latter being funded by big companies). The forum lacks a single person who is likely to take a critical perspective on the underlying premise that Britain needs to "compete" for investment by offering tax cuts to big business.

It doesn't take a genius to work out which way this forum is headed. Multinational companies like subsidies. They particularly like tax subsidies in the form of lower tax rates. This won't make them competitive in the public interest sense of the term, but it will boost share values and remove the pressure on them to compete by offering the right quality goods and services at a price that competes with rival products.

This forum is yet another example of how governments have handed the keys to the sweet shop over to the kids. For decades successive governments have pandered to the demands of big businesses for a "competitive" tax environment. The logical outcome is not that corporate tax rates will tend towards zero, but, worse, companies will be demanding negative tax rates (i.e. negotiated state subsidies) to invest in a nation. Far-fetched? Not a bit, it already happens in many poorer countries where long term tax holidays are accompanied by subsidised energy, water, labour and other inputs.


Post a Comment

Links to this post:

Create a Link

<< Home