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If you want to know what might work, ask the establishment what you should NOT do…

Tax haven route won’t work for post-Brexit UK, OECD says.

Ok then, making the UK a tax haven is clearly an excellent idea, enhancing competitiveness vs. the rest of the OECD. Of course that could not possibly be why a mouthpiece of the OECD thinks it would be a bad idea, right? Right?

33 comments to If you want to know what might work, ask the establishment what you should NOT do…

  • JohnK

    Their idea of a “tax haven” would presumably be a state with non-confiscatory rates of tax, which might “compete” with jurisdictions such as France, Germany or the USA.

    Sounds like a good idea, let’s bring it on.

  • Stonyground

    A rough translation would presumably be:

    “Oh shit, if they do that we’ll be up shit creek without a paddle. Tell them it’s a really bad idea, see if that works.

  • Stonyground

    Presumably this idea has been floating around already. Otherwise it would be really stupid of the OECD to draw attention to it by saying don’t do it. It would be like Brer Rabbit saying ‘Don’t throw me into the briar patch Mr. Fox’ but without the reverse psychology.

  • Laird

    “Saint-Amans also noted that the UK may not be able to afford to cut its tax rates much because the pressure on public finances ‘which may only increase with the negative impact of the Brexit on UK growth’.”

    I guess the Laffer Curve is unknown to the OECD

  • Doesn’t matter. I can’t see any of the current crop of pols doing it whether the oecd thinks it’s a good idea or not. Like unilateral free trade it’s a marvelous idea that theoretically Britain could do out of the EU but won’t.

  • Actually, having read the link I see it says

    The United Kingdom is unlikely to try

    which is pretty much the same thing.

  • Great. Ireland is in the EU and not a tax haven, so lets gradually align our corporation tax rates with Ireland.

  • Laird

    John Galt, that strategy might not work for much longer. The EU recently issued a Directive against “tax avoidance” (which, of course, is the perfectly legal practice of structuring your affairs to as to pay the minimum tax required by law), and it’s only a short step from that to more explicit harmonization of tax rates across the continent.

  • Johnathan Pearce

    The staff of the OECD pay no tax.

  • Laird

    Of course they don’t.

  • Plamus

    It’s a great idea ceteris paribus, but… if the UK wants to remember what a trade embargo looks like, you should try it. The EU will not tolerate this. They (along with the US) broke Switzerland. Tax havens are the one thing the next war in Europe might be fought over.

  • Cal

    >They (along with the US) broke Switzerland. Tax havens are the one thing the next war in Europe might be fought over.

    Switzerland is a small country that couldn’t make the front pages even if Roger Federer strangled Jean Claude Juncker with a feather boa. The UK is different, especially now it is on the rampage, and the EU is battered and defeated.

  • Nicholas (Unlicensed Joker!) Gray

    At least you in Britain have a government with the numbers to govern! Australia has what looks like a hung parliament!

  • Chester Draws

    At least you in Britain have a government with the numbers to govern! Australia has what looks like a hung parliament!

    Spare me the bleating about “hung”. It’s only hung if the Independents refuse to join either side. What you mean is a coalition will need to be formed.

    Britain didn’t collapse when they had a coalition government. Nor NZ collapse when it has a minority government. Nor any of the dozens of countries who routinely have coalitions suddenly descend to anarchy.

    Belgium did actually have a “hung” parliament, and it took them a year and a half to get a properly sworn in government. You know what — people barely noticed.

    Governments are grossly over-rated. Mostly you can get on fine without them. You’d think someone on this blog would recognise that!

  • Dead Man Talking and all that but…

    George Osborne has pledged to cut corporation tax to encourage businesses to continue investing in the UK following the EU referendum vote.

    In an interview with the Financial Times, the chancellor said he would reduce the rate to below 15% – some 5% lower than its current 20% rate.

    That would give the UK the lowest corporation tax of any major economy.

  • Lee Moore

    Governments are grossly over-rated. Mostly you can get on fine without them. You’d think someone on this blog would recognise that!

    Nah – Belgium has certainly had a government, it’s just government by civil servants*. Essentially a smaller version of the EU – you stumble through without troubling the common herd for an opinion.

    * by which I mean 100% by civil servants rather than the meagre 90% which obtains when elected politicians are involved

  • David

    “tax avoidance”

    Laird do you mean tax minimization which is a perfectly legal endeavour? Tax avoidance I always took to be an effort to not pay tax you were legally obliged to cough up.

    See the late Kerry Packer giving evidence to a Parliamentary Enquiry at https://www.youtube.com/watch?v=-WTfoT_y-BQ

  • Belgium did actually have a “hung” parliament, and it took them a year and a half to get a properly sworn in government. You know what — people barely noticed.

    And that still didn’t get people to stop treating politicians as though they’re more important than the rest of us.

  • Rob Fisher

    I am thinking that if the EU wants to impose tariffs then the UK will be forced into becoming more competitive with low taxes and fewer regulations. The small cut in corporation tax being talked about today is an indication of this.

  • PeterT

    I may well be wrong but I seem to recall that the Switzerland tax haven thing was about privacy (US wanted a list of US citizens that were Swiss banking customer), rather than the tax rate.

  • Watchman

    I’m pretty certain that an attempt by the EU and US to mandate the UK tax rate might flounder on the support given to the UK by the rest of the world, who in general have this strange objection to other governments telling them what their taxes can be. Plus WTO rules will not allow vindictive responses (never mind the fact that entering that sort of trade war would likely crash the confidence of the EU, and possibly even the US, economy with disastrous results).

  • David:

    I think “tax avoidance” nowadays means what you referred to as “tax minimization”; what you’re thinking of would be called “tax evasion”.

    (I say “avoision”.)

  • Laird

    David, Ted S is correct: “avoidance” is merely the legal minimization of your tax bill; “evasion” is illegally failing to pay the tax due. Here is how the IRS defines the terms:

    tax avoidance—An action taken to lessen tax liability and maximize after-tax income.
    tax evasion—The failure to pay or a deliberate underpayment of taxes.

    The distinction is of vital importance, but statists love to conflate the two to confuse the public (witness your question).

  • John Galt III

    Go to ZERO Corporate Tax- Estonia did

    Of course that would make France and Germany uncompetitive, but that’s the point, right?

    https://en.wikipedia.org/wiki/Tax_rates_in_Europe

  • Paul Marks

    Good post.

    However, to reduce taxation GOVERNMENT SPENDING must be reduced.

    Reducing GOVERNMENT SPENDING is the key to everything.

    Mr Cameron and Mr Osborne have wasted the last five years – more than wasted it.

    They have given the public to understand that “austerity” and “cuts” has been imposed – whilst actually spending money like drunken sailors.

    It will be very hard indeed to cut anything now – as people think spending already has been “cut to the bone” and so (due to the endless nonsense talk of Mr Cameron and Mr Osborne).

    What must be done is to pick FUNCTIONS – things that the government now does (such as subsidise sport or the arts – or “overseas aid”) and not do these things any more.

    “Making things more efficient” and so on just does not work with government – one has to pick functions (government departments) and not do those things any more.

    And with the collapse of the Credit Bubble economy (which will happen) just get rid of a few Departments, such as “Culture, Media and Sport” and “Overseas Aid” will NOT be enough.

  • Nicholas (Unlicensed Joker!) Gray

    Well, the Italians should hurry up and have their banking crisis! Then people will realise that Brexit is the best thing to happen since sliced bread!

  • Thailover

    Plamus said,

    “It’s a great idea ceteris paribus, but… if the UK wants to remember what a trade embargo looks like, you should try it. The EU will not tolerate this. They (along with the US) broke Switzerland. Tax havens are the one thing the next war in Europe might be fought over.”

    Let Fuhrer Merkel try. The EU can’t even hold it together WITHOUT a military crisis. ‘Start calling her Adolph Hitler if she starts to talk any sort of military response to anything and see what happens.

    Being attractive to investors is hardly to be a “tax haven” nor a punishable offense. What SHOULD BE a punishable offense is the double-taxation on the same monies when corporate taxes eats off a share of earnings and then the shareholder has to pay taxes AGAIN in dividend taxes when those earnings are distributed.

    If there weren’t so many economically stupid people in America, we would have a zero % corporte tax rate, but the “corporations are evil” poison meme is alive and healthy here in the states.

  • Thailover

    Oh, and as far as a trade embargo goes…if the EU wants to punish itself through austerity measures, they’re welcome. The death of the now perhaps doomed union will simply come quicker.

  • Thailover

    Watchman said,

    “I’m pretty certain that an attempt by the EU and US to mandate the UK tax rate might flounder…”

    Realize that America’s megalomaniac communist in chief is on his way out there door and will likely be replaced by megalomaniac “The Donald. I seriously doubt President Trump will interfere with the UK over it’s chosen corporate tax rate.

  • Thailover

    Laird said,

    “I guess the Laffer Curve is unknown to the OECD”

    I was thinking the same thing. It sickens me the extent that the supposed people “in charge” don’t seem to realize the difference between a tax rate and tax revenue, thinking that they’re necessarily directly proportional, and don’t consider the obvious, that people’s investments and spending behaviors and strategies change when the governments arbitrarily decide to charge people more for the luxury of existing and breathing.

  • Realize that America’s megalomaniac communist in chief is on his way out there door and will likely be replaced by megalomaniac “The Donald. I seriously doubt President Trump will interfere with the UK over it’s chosen corporate tax rate.

    Check those poll numbers and try again. Donald is way behind and unless the polls are way off it will be Shrillary the Unconvicted for POTUS.

  • Julie near Chicago

    God help us.

  • Laird

    JG, Trump is indeed behind in most polls, but it’s an overstatement to say “way behind.” And leaving aside the questionable accuracy of modern polling (witness the Brexit vote and the last two general elections in Britain), it’s simply too early to attach much weight to them. At this stage in 1980, most polls had Jimmy Carter about 25% ahead of Ronald Reagan. We all know how that turned out.