The Shadow Chancellor’s letter to Alistair Darling notes how much Britain’s tax competitiveness has declined under Labour, and attributes to this the potential departure of companies such as Regus and Charter.
The full letter reads:
I’m sure you are as concerned as I am about the news that Regus, Henderson Group and Charter are thinking of leaving the UK, citing concerns over the tax environment. This news follows previous announcements by Shire and United Business Media that they are relocating to Ireland. It is further evidence of the damage done to the UK by the confusion you have caused in the last year over the future of our business tax regime, combined with the fact that ten years of a Labour Government has left us with some of the highest corporate tax rates in the European Union.
In order to prevent more companies from leaving, I urge you to consider in advance of this autumn’s Pre-Budget Report the proposals we have developed on corporation tax. This involves, as an initial step, reducing the main corporation tax rate from 28 per cent to 25 per cent. Given the parlous state of the public finances, this should be paid for by simplifying the capital allowances in the way we have proposed. This would go some way towards undoing the damage the government has done by failing to keep pace with European tax rates. As I’m sure you are aware, when the Conservatives were in power, Britain had the fourth lowest rate of corporation tax in the EU, whereas we now have only the nineteenth lowest rate.
I would also urge you to implement the proposals that I commissioned from Lord Howe for a permanent simplification of the tax system. These include a new Office of Tax Simplification to examine the tax system and make proposals for simplification, and a new convention that changes to tax law should be made no later than the Pre-Budget Report. This would bring greater certainty and proper consultation in place of damaging uncertainty and a lack of consultation we have seen, as illustrated by your recent decisions over the taxation of foreign profits and Capital Gains Tax.
As you demonstrated in last year’s Pre-Budget Report, you are capable of adopting Conservative proposals. With companies leaving Britain, weakening an already ailing British economy, I urge you to adopt our proposals in order to restore our competitiveness and help prevent any more companies from deciding to leave the UK.
George Osborne MP