So Who Benefits Most?

1. Globalization is a good thing, it has been around since the globe was created, whatever guidelines you invent, ‘globalisation’ (aka free marketplaces) will adapt and work its way circular them. 2. If you can choose from different countries where you can establish up a business, tax is not the surface of the list.

Depending on the kind of business, you ask: Is there a well balanced legal system, rule of regulation, security, honest authorities officials? You then take a look at costs – what exactly are wages, rents, and raw materials prices? How good are transport links (for folks or finished goods)? How reliable are banks, telephones, power materials? If a national country ticks all those containers, only then do you be concerned about the taxes system – and it’s not merely the headline rates that matter, simpleness, and stability is just as important.

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For example, company tax is higher in India and China than in most of Europe, and they don’t much adhere to the ‘rule of legislation’, but the wage differential is so huge, it doesn’t matter much. Similarly, corporation tax is higher in America than in the majority of Europe, but their Sales Tax is much lower than European VAT (the most severe tax of all). 3. Before we worry about ‘motivating FDI’, let’s be concerned about existing UK businesses.

If the UK can be an attractive place to do business, then we don’t need to worry a lot about FDI – there’ll be plenty of UK businesses growing here, rather than relocating abroad. If they locate manufacturing in the Far East, there’s not much you can (or should) do to avoid them.

If you’re worried about UK businesses relocating largely for taxes reasons, then I’ve got a list of the main changes that would make the UK more attractive here. 4. There’s one tax I skipped off that list – and that your IFS press release doesn’t even mention – Business Rates. Let’s assume that people stripped out the structures component from the valuations and harmonized the rates for occupied and unoccupied sites and allowed local councils to keep all the proceeds (rather than it being pooled nationally). Let’s bung in Stamp Duty Land Tax and corporation taxes on capital increases once and for all measure and rename it ‘Site Value Rating’.

5. Now, there are many things on a business’ checklist (see point 2 above) that local councils can influence. Let’s take for example Crossrail. Let’s imagine that Bill Gates, in a moment of generosity, stumps up the £12 billion it shall cost to build, and off we go. Well, yes, of course, but by the same token, their rents (actual or notional) will go up.