The chancellor’s plan to make further cuts to corporation tax will fuel a global race to the bottom (Report, 4 July). The UK corporate tax rate was 28% in 2009, but these new plans could see it fall below 15%. This is part of a wider trend which has seen corporate tax rates fall across the world.
Poor countries are the big losers in this downward spiral as they are particularly dependent on corporation tax – relying on it for about 16% of their revenue, as opposed to an average of 8% in developed countries. On top of losing an estimated $200bn a year to corporate tax avoidance, developing countries are being pressured into offering ever lower corporate tax rates. Healthcare, schools and other key public services are left starved of resources as they are deprived of tax revenues, hitting women and children hardest.
As IMF director Christine Lagarde says, “the problem with a race to the bottom is that everyone ends up at the bottom”. The chancellor should think again.
Charlie Matthews
Advocacy Adviser, ActionAid UK
• Just over a week after the referendum, and the government’s first decisive move is to cut corporation tax. There must be dancing in the streets in Hull and Huddersfield.
Frank Startup
Cirencester, Gloucestershire
