Corporate Tax Threat to the Economy

Damon Lambert

How proposed changes to corporation tax will damage the UK economy by reducing GDP by £73 billion and cutting future investment in Britain by £58.4 billion over 10 years

The Bruges Group has produced a groundbreaking study analysing the EU's attempt to control business taxation via its Common Consolidated Corporate Tax Base (CCCTB) initiative.

It is a classic EU policy, which the European Commission hopes will create a pan-European tax regime, a one-size-fits-none approach that benefits the bureaucrats at the cost of the ordinary taxpayer.

In the paper - Costly, Complex and Counterproductive: The Case Against a Common Consolidated Corporate Tax Base - the Bruges Group exposes the implications of the the EU’s latest tax power grab. It will;

Drive-up the rate of business taxation
It will effectively increase the UK ‘s rate of corporation tax in relation to other states in the EU; driving investment away from Britain to states with lower levels of tax.

Damaging GDP
It will have the effect of reducing the GDP of the fragile UK economy by £73 billion over 10 years, equal to each UK inhabitant paying £1,200 each or the equivalent of British taxpayers having to pay an extra 1.5p in the basic rate of income tax for each of those years. Otherwise the Government will lose revenue; increasing the UK’s debt level by £28 billion.

Force businesses to leave the UK
Brussels plan to control corporation tax would also harm the business environment in Britain. It will force up corporate tax bills, greatly add to tax complexity, massively increase the administrative burden and force more UK businesses to join the 'Taxodus' and leave Britain. Furthermore, the CCCTB will mean that Britain shall lose an estimated total of £58.4 billion of investment over 10 years as the apportionment basis it requires will work against the UK.

About the Author
Damon Lambert is the UK Corporate Tax Director of a major European Bank. Previously, he worked for 11 years in KPMG’s financial sector practice where he specialised in advising on mergers and acquisitions, primarily for financial sector multinationals. The advice he provided to clients included amongst other issues the impact of the EU and the ECJ on UK tax law. Damon is a qualified Chartered Accountant. He regularly writes on European tax matters and was a member of the working party on the Tax Reform Commission instigated by George Osborne, co-authoring the chapters on business taxation and tax reforms in other jurisdictions.
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