Joe Biden labelled a 'bumbling leader' by host
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Matthew Lesh, the head of research at the Adam Smith Institute, has described the US President’s plan for a minimum global rate of corporation tax as an “imperialist effort to suppress economic competition between nations”. Mr Biden, 78, has called on the UK and 37 other members of the Organisation for Economic Co-operation and Development (OCED) to enforce a minimum corporation tax rate of 21 percent.
The US treasury department has since put forward a rate of 15 percent to kick-start talks.
Writing in the Daily Telegraph, Mr Lesh said: “Biden wants to increase US taxes to fund a domestic spending splurge – while avoiding the consequences of becoming uncompetitive globally and businesses shifting operations overseas.”
Mr Lesh says corporation tax is bad for business as it puts off investors and bad for people as it drives down wages and hikes prices for consumers.
He also claims a blanket level of tax would make smaller countries, such as Ireland, Singapore and Hungary uncompetitive and described the policy as “pulling up the drawbridge”.
Mr Lesh added: “These smaller nations don’t have the advantages of many large countries, like natural resources, significant domestic buying power and plentiful capital – meaning they need competitive tax rates to become prosperous.”
The financial expert points out the average corporate income tax rate has already decreased from 32 percent to 24 percent across the OECD since 2000.
Chancellor Rishi Sunak has previously announced a plan to increase corporation tax from 19 percent to 25 percent for large companies by 2023.
Last night, MPs voted 364 to 261, majority 103, to reject a Labour amendment calling for a review of the impact of a global minimum rate.
It was considered as part of debate on the Finance Bill, which enacts measures in Mr Sunak’s last Budget.
The decision by the Treasury to increase corporation tax has been described as a “retrograde step” by Mr Lesh.
However, he insists the fiscal policy “will most likely prove unnecessary”, as the UK economy begins to recover faster than experts first feared.
Mr Lesh says individual countries should retain sovereign control over economic policy and points out Brexit has enabled the UK to shape its own domestic future.
He added: “The world is facing some extraordinarily difficult years in recovering from the pandemic-induced recession.
“The last thing we need is efforts to strangle business just as we want to get them hiring and producing once more.
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“How individual states choose to operate their tax systems should not be determined by other countries. Once you surrender on the principle of being able to set one tax rate you effectively give up on them all.
“Brexit provided the unique opportunity for the United Kingdom to take back control of policy from a distant, unaccountable global organisation.
“The newfound freedom of Parliament to make policy in regards to domestic matters, particularly as fundamental as the tax rate, should not be sacrificed at the behest of anyone.”
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