Corporation tax cut . . . is this the new normal?

George Osborne has pledged the Government will slash corporation tax in the UK.
The surprise announcement came as part of a five point plan to reassure the rest of the world that the UK was “open for business” with a “super-competitive economy” with low tax rates and a global focus.
The former Chancellor said the corporation tax rate would be cut to below 15% in the first clear move to boost business and win back the confidence of potential investors.
Mr Osborne was hoping the move would put the brakes on companies who were considering moving their business abroad following the UK vote to leave the European Union.
The ex-Chancellor had already used his Budget 2016 statement back in March to signal that corporation tax would fall to 17% by 2020.
Now he has gone one stage further, pledging to take the UK rate nearer to the 12.5% in Ireland to cushion the shock of the Brexit vote.
However, Mr Osborne did not say when the cut would be made.
Business leaders have called on the Government to create a climate which would continue to attract new investment, encourage business confidence in Britain and to make the UK more a more attractive place to start a business.
Mr Osborne, speaking to the Financial Times before he was replaced, said: “We must focus on the horizon and the journey ahead and make the most of the hand we’ve been dealt.”
The five point plan also includes a new push for investment from China, support for bank lending, a renewed push for investment in the northern powerhouse and maintaining UK’s fiscal credibility.
The average corporation tax rate among many developed economies is 25 per cent.
A cut to below 15% would give the UK one of the lowest corporation tax rates across the Europe. The rate in Montenegro is 9% and 12% in Moldova, both are chasing EU membership. The US has a corporation tax rate of 35%.
When the Conservatives came to power in 2010 the headline rate was 28%, still no where near the early 1970s when corporation tax in the UK was 52%.
Bank of England Governor Mark Carney has said he believed the UK economy would need more stimulus soon.
The former director general of the World Trade Organisation Pascal Lemy told the BBC that the move would be seen as, in effect, the start of the Brexit negotiations and starting with tax was not the right way to go about it.
Clifton Asset Management Group Director Anthony Carty said: “Clearly in this time of uncertainty the stops need to be pulled out to give UK businesses confidence.
“It looks like this is the first of what, I believe, will be a number of announcements designed to retain and attract investment in ‘UK PLC’.”