By Jack Mintz, August 23, 2022
How quickly the world changes. Last year, politicians blathered about raising taxes to pay for COVID-related debt and the Great Reset. This year, they are talking about tax cuts to relieve beleaguered voters from sky-high inflation. In the U.K., the leading contender for leadership of the Conservative Party, Foreign Secretary Liz Truss, has been catching the public’s eye with a tax-cut agenda to undo the damage created by outgoing prime minister Boris Johnson’s earlier budgets.
In those past two budgets, Johnson and Rishi Sunak, ex-Chancellor of the Exchequer, raised corporate taxes by six points on companies with more than £50,000 in profits, introduced a new windfall tax on oil and gas companies, deindexed income and inheritance tax brackets and raised health-related payroll taxes. Truss is promising to cancel the company tax rate hikes, not renew the windfall tax and forgo payroll and green tax increases.
She has also indicated that the U.K. may withdraw its support for the OECD global minimum tax on foreign affiliate profits, a major setback for countries looking to “stitch up” corporate tax rates to 15 per cent. With the Schumer-Manchin deal passed by Congress last Friday, the U.S. is not enacting a corporate minimum tax compliant with the OECD model. Hungary is opposing the tax, which could block EU unanimity to accept it. Soon, the OECD global corporate minimum tax may be on its deathbed.