Tax Haven (Photo by manx_in_the_world/Getty Images)
Hammond reveals a stark choice: single market or deregulated tax-haven
While Prime Minister May was engaged in a second weekend of mixed messages about whether she will advocate a hard or soft Brexit, her Chancellor was telling German newspaper Welt am Sonntag that if we don’t get to keep full access to the single market, Britain will indeed be likely to become the deregulated tax haven that unions have been warning about.
He wasn’t advocating that, at least, but he has essentially made clear what the options are. What British working people need is a deal that ensures tariff-free access to the EU for British goods and services – no tax on things that are ‘made in Britain’ – and no rules of origin or complex regulatory requirements that make it more difficult for British businesses exporting services to the EU. And, of course, we need to keep up with the workplace rights that the rest of Europe gets, including future rights, not just the ones we have now. That could be achieved by staying in the single market.
Philip Hammond told the German newspaper – in terms he hasn’t really done for British media – that the alternative to that is to cut corporate taxes and deregulate even further (he did not go so far as to threaten workplace protections specifically – but that might indeed be on the cards, certainly if he listens to former business leader John Longworth.) Britain already has some of the lowest corporate tax rates in the EU, and a tax war with the rest of Europe would mean less money to fund Britain’s already stretched public services.
And don’t fall for the line that if we lower our taxes we will attract so many new businesses that the overall tax take goes up: the Conservatives have already tested that argument and found it doesn’t work. As my colleague Janet Williamson wrote in July:
“If corporation tax were a decisive factor, Bulgaria, with a rate of 10% corporation tax, would be a magnet for inward investment – which it is not.”
As more people realise that these are the options, expect to see support for a hard Brexit reduce. Already, polling by Open Britain and You Gov over the weekend suggested that people were unwilling to pay the price for leaving the single market.