George Osborne is planning to slash corporation tax to less than 15 per cent in an effort to woo business deterred from investing in a post-Brexit Britain as part of his new five-point plan to galvanize the economy.
While the chancellor did not backtrack on his warning that leaving the EU could push the country into recession, he told the Financial Times: "We must focus on the horizon and the journey ahead and make the most of the hand we've been dealt."
In his first interview since Britain voted for Brexit, Mr Osborne said he wanted a leading role in shaping Britain's new economic destiny, laying out plans to build a "super competitive economy" with low business taxes and a global focus.
Mr Osborne wants to set the lowest corporation tax rate of any major economy, announcing a target of less than 15 per cent, down from 20 per cent now. He said Britain should "get on with it" to prove to investors that the country was still "open for business".
Such a sharp cut in business taxes would take Britain close to the 12.5 corporation tax rate in Ireland and would anger EU finance ministers who fear a race to the bottom. The move could also alienate voters, given recent controversies over tax deals struck with multinationals such as Google.
The head of tax at the Organisation for Economic Co-operation and Development warned, in an internal memo cited by Reuters, that the fallout from Brexit "may push the UK to be even more aggressive in its tax offer" but that further steps in that direction "would really turn the U.K. into a tax haven type of economy".