“Let it be heard from Shanghai to Sao Paulo, Britain is open for business,” Osborne rallies
By Michelle Perry | Published 15:49, 23 March 11
Grandiose language coupled with big statements such as “Let it be heard from Shanghai to Sao Paulo, Britain is open for business” made for a rousing reception among the coalition’s ranks. But much of what he said had already been pre-announced.
Apart from a few sweeteners to dull the pain of the public spending cuts, the Budget’s focus was on pro-growth, not giveaways. George Osborne voiced his concerns – echoed by business leaders – that the UK’s competitiveness was slipping away because of its complex tax system and burdensome regulation.
Setting the picture he then signalled his intent not only to curb the perceived outflow of multinationals from the British Isles, but also to increase foreign investment. All good, so far.
The chancellor pledged “not to increase taxes but to simplify them,” announcing a reduction in the headline rate of corporate tax by 2 percent, 1 percent more than that forecast.
“It is time we took this historic step to simplify our tax system and make it fit for the modern age,” he said.
Chris Sanger, global head of tax policy at Ernst & Young, says Osborne “subtly changed his mantra today”, arguing that he was “sending exactly the right message to investors, wealth creators and those with aspirations”.
But as he gave with one hand, he snatched away with the other by offsetting the benefits of the corporate tax rate reduction to the banking sector by increasing the permanent bank levy this year.
Already experts are suggesting that his words may not be quite what they seem.
Matthew Barling, banking tax partner at PwC called the move “somewhat surprising”, saying it would “resulted in four different rates … which is representative of the complexity of tax rules the sector now faces”.
Not so simple after all.
Chas Roy Chowdhury, head of tax at ACCA, goes even further in questioning Osborne’s “balancing act”, wondering if “there could be a shaky future ahead”.
In which case, it remains to be seen whether Osborne’s Budget is, after all, for “making things, not for making things up”.