In the Budget, Osborne cuts corporation tax by 2%, from 25% to 23%.
His aim of course is to attract business here, and in a smoothly choreographed movement, Martin Sorrell, chief of WPP advertising, announces that he may return to the UK. Just like that. Amaazing. WPP's subsidiary had an interest in Imago, who did work for Robert Mugabe in 2008.
There is an interesting wrinkle here:
Corporations have the status of legal personality. "Legal personality allows one or more natural persons to act as a single entity (a composite person) for legal purposes. In many jurisdictions, legal personality allows such composite to be considered under law separately from its individual members or shareholders. They maysue and be sued, enter into contracts, incur debt, and have ownership over property. Entities with legal personality may also be subject to certain legal obligations, such as the payment of tax. An entity with legal personality may shield its shareholders from personal liability."
As legal personalities, corporations should be on a tax rate of 50%. Osbore has them on half that, and falling.
Here's a rough list of comparable countries' rates:
Country %corp tax
Osborne says of course that if we put up our taxes, the corporations would take off to countries with lower tax rates. Although it is questionable that they could all do this, it is enough of a threat to put a political block on any talk of unilateral setting of corporation taxes at a rate commensurate with their legal status.
Therefore we must press the Government to put the matter of a global corporation tax regime (with closure of tax havens) on the agenda of the G20 meeting in November. This will benefit the entire global economy.
They won't like it. They don't like the taste of cold steel. But it has to be done. Corporations cannot enjoy the benefits of having legal personality without shouldering the responsibility of same.
Corporation law reform