After nine weeks into Britain’s new trading relationship with the EU there is an opportunity to explain what we can do with our new trading freedoms.
We are currently in the midst of a bitter divorce from our biggest trading partner, which has left large parts of our economy struggling with more red tape, higher compliance costs and less opportunities to trade. Businesses need a new direction and more support to seek the new opportunities we were promised after Brexit.
A positive vision of our newly won trading freedoms is now required and what corporate UK will look like in the future. This is a reset moment for our economy. But in the meantime, businesses need help to cope with the reality.
Tax rises don’t support businesses and our economy, but further reliefs do. The Chancellor has the freedom to stimulate parts of our economy with certain indirect tax reliefs, as he did with the Stamp Duty holiday. An overhaul of our VAT rates must be on the cards given that we are not part of the EU VAT framework anymore. The abolishment of the ‘tampon tax’ was a start, but much more needs to be done to make the VAT system simpler for businesses.
A rise of Corporation Tax is poison for our economic recovery, but also for foreign direct investment in the UK. If our vision is to become a global hub for international free trade, we clearly cannot start this journey by increasing Corporate Taxation for businesses. There are more intelligent ways to reform the Corporate Tax system. Keeping tax rates low but increasing the tax base to ensure every business pays their fair share is a good start.
If the UK wants to attract international talent to help build a new economy, we must create incentives for talents to come. EU-based talents just lost access to the UK and must go through a tedious visa process to live and work in the UK. Unless there are clear tax and other financial incentives, these talents will be going somewhere else. This is another area where I expect a positive message from the Chancellor in the Spring Budget.