In his budget speech today, U.K. Chancellor of the Exchequer George Osborne announced an expedited reduction of the country's corporate tax rate to 24 percent as of April 1. The rationale? To improve Britain's global competitiveness.
[The] headline rate of corporation tax remains the most visible sign of how competitive our country is. We’ve already cut the rate from 28% to 26%. This April it is due to fall again to 25%. I can announce today a further cut of one percent - to be implemented right away. From next month, Britain will have a corporation tax rate of just 24%. And we will continue with the two further cuts planned next year and the year after. So that by 2014, Britain will have a 22% rate of corporation tax. The biggest sustained reduction in business tax rates for a generation.
A headline rate that is not just lower than our competitors, but dramatically lower. 18% lower than the US. 16% lower than Japan. 12% below France and 8% below Germany. An advertisement for investment and jobs in Britain. And a rate that puts our country within sight of a 20% rate of business tax that would align basic rate income tax, the small companies rate and the corporation tax rate.
More context from the London Evening Standard, with our highlighting.
The Chancellor had set out his plans in last year’s Budget to reduce the main company tax from 28% to 23% by 2014 to attract more businesses to the UK, prevent others moving to cheaper tax havens and encourage those who have moved to return home.
The main rate of corporation tax was set to fall from 26% to 25% on April 1, but today it was announced it will be cut to 24% and continue to fall over the next two years to 22%.
Good, reasoned, globally minded economic policy in the United Kingdom, meant to benefit British citizens through investment, economic growth and increased tax revenues. Meanwhile, the U.S. corporate tax rate will become the world's highest on April 1 when Japan lowers its corporate tax rate. Seems like tax madness, hence Business Roundtable's "tax madness" campaign to point out the competitive folly of having the world's highest rate.
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