Outlook I was trying to find out who writes George Osborne’s jokes yesterday. Tory comics are few and far between, after all, yet the gag that got him front page billing in yesterday’s Financial Times was so clever, so rich in irony, that it must have been done by a pro.
But then the Treasury told me it was for real. The Chancellor really does plan to announce a clampdown on nasty multinationals basing themselves in low tax countries.
What, said I, the same George Osborne who has spent the past five years boasting about how he was going to lure foreign businesses to the UK by slashing our corporation tax rate to among the lowest in the world?
The same George Osborne who has valiantly battled against other countries’ protests about Britain’s “patent box” which gives an even lower tax rate to profits made from patented products?
The same George Osborne whose policies have attracted Pfizer and AbbVie to offer multi-billion-dollar deals to buy UK companies and relocate here – much to the irritation of Capitol Hill?
Yes, it is indeed he. And he wasn’t joking.
Yesterday’s story highlighted the likes of Apple, which bases itself in Ireland. But Ireland’s not as cheap as you think: for companies using Mr Osborne’s patent box in the UK, the rate is 10 per cent – some 2.5 per cent lower than Ireland’s.
If you think this has not gone unnoticed among our European friends, think again. They fume at the way the UK has set itself up as a tax haven.
When Mr Osborne refers to cracking down on multinationals for basing themselves in low tax havens, what he really means is cracking down on companies who don’t base themselves in our tax haven.
Which brings us to the question: what can he do about it? In his speech he said he would be announcing what sounded like tough, unilateral action in the December Autumn Statement.
But this seems curious: how can a British Chancellor claim jurisdiction over an American technology company established in Ireland?
The answer is, he can’t. It takes the co-operation of many governments to draft simpler tax laws that will prevent multinationals gaming the loopholes to base themselves in places like Dublin. And this is cooperation is happening, albeit slowly, in the EU, the OECD, the G20.
Coincidentally, or not, at the G20 summit in Brisbane a couple of weeks before the Autumn Statement, Britain and the rest of the world will be discussing ways to prevent firms shifting profits to low tax jurisdictions. Such talks are dogged by disputes from intransigent countries (like the UK) refusing to give up their tax-cutting wheezes. But some measures will be agreed.
Expect these to be duly photoshopped into Mr Osborne’s Autumn Statement, complete with linguistic special effects to appear to the electorate like the actions of a heroic, go-it-alone Chancellor. Now, there’s the real joke.Reuse content