Charlie Elphicke is MP for Dover and Deal.
Leaving the EU offers a real opportunity to make our economy more vibrant and increase Britain’s economic growth rate. We should make the most of the economic opportunity by planning now to be ready to zoom ahead on day one – modernising our tax system so it works for Britain not big business tax avoiders. A system of lower, fairer, simpler taxes will enable us to be a more internationally attractive destination for businesses investment. Creating Coastal Enterprise Zones and bringing back duty free for trips to the EU will help to drive a renaissance of the regions and the coastal communities that suffer most from deprivation. Getting it right we can make Brexit a massive success for the whole of Britain.
Lower, simpler, fairer taxes
For years, international businesses have exploited EU laws such as the Parent/Subsidiary Directive to engage in industrial scale tax avoidance. EU laws intended to stop member states “discriminating” against businesses from other member states have also been used to undermine our tax system with the support of the European Court of Justice (ECJ). Not only are they not paying business taxes – they want us to pay them some £44 Billion in tax reclaims by exploiting EU laws.
When the UK leaves, we will no longer be bound by the ECJ. We will be free of the EU tax laws that hinder us from making our tax system work fairly. This is a great opportunity to see that big international businesses are required to pay a fair share.
A free hand will make it easier to take forward the long overdue modernisation of business taxation – especially of internet businesses. Amazon will tell you that ordering goods from your kitchen table in the UK that are delivered from a warehouse in the UK is somehow taxable in Luxembourg. Meanwhile, Google with five British offices, 5,000 staff and a £1 billion super-HQ in London under way will tell you they are only taxable in Ireland. This kind of tax fiction makes people rightly cross. In addition, cracking down on the evasion of import taxes will level the competitive playing field for businesses based in the UK. The extra funds raised from reforming the tax system can be used further to reduce business taxes across the board, with a policy of lower, fairer and simpler taxes. In this way, we can make the UK a more internationally competitive low tax country where businesses will want to be.
Supporting a renaissance of the region
Along with a competitive tax system, outside the EU Britain can drive forward a renaissance of the regions. Coastal Enterprise Zones, drawing on the excellent Free Ports proposal of my colleague Rishi Sunak, could boost regional areas suffering most from deprivation. Coastal Enterprise Zones would be areas treated as ‘outside the country’ for customs purposes. Of the UK’s 30 largest ports, 17 are in some of the most deprived areas of Britain. It is estimated that such Coastal Enterprise Zones could create more than 86,000 jobs.
The international evidence is positive, with some 3,500 similar zones worldwide, employing 66 million people across 135 countries. In the US alone there are 250 such zones, employing 420,000 people handling US$750 billion of goods. Yet there are none in Britain today, due to the EU Customs Union and EU State Aid laws. Once we leave the EU, we will be free to establish this kind of enterprise zone.
In 1999, duty free was abolished for journeys trips to the EU. That hit the ferry industry and regional airports hard. Bringing back duty free would be a further boost for the UK’s regional economies. Jobs and money would increase in often struggling coastal port communities and regional airports flying to destinations in the EU. The return of duty free would mean more cruise ship calls to UK ports. This is because having one non-EU stop on a cruise makes the entire trip duty and tax free for passengers. Stopovers at UK ports would suddenly become very attractive for European cruises.
Bringing back duty free would help increase tourism from the EU to the UK, boost British trade, create more retail jobs and increase the exports of products manufactured in the UK.
It is important to start preparing now to be ready for the return of duty free. Amendments are needed to legislation on VAT, excise duty and excise goods. Yet these changes need to be made in good time so operators can prepare and make the most of the opportunity. Business are expected to take up to nine months to get ready, so early confirmation from the Government is needed. The upcoming Customs Bill is an opportunity to legislate for the return of duty free – as well as pave the way for Coastal Enterprise Zones.
Leaving the EU will enable us to modernise our tax system and build a Britain that works for everyone – particularly the coastal towns and historic regions of Britain. With less than 600 days to go before we leave, we must plan now to be ready on day one to boost jobs, the economy and drive forward a renaissance of the regions.