Theresa May's pledge to follow Donald Trump's corporate tax cut is 'reckless', Jeremy Corbyn says

The Prime Minister had pledged to keep the lowest rate in the G20 despite Mr Trump's election

Jeremy Corbyn at the Confederation of British Industry (CBI) annual conference in London (PA Wire/PA Images)

Theresa May’s pledge to follow Donald Trump’s policy of slashing corporate taxes to new lows is “reckless, short-term grandstanding”, Jeremy Corbyn has said.

The Prime Minister pledged on Monday to keep the UK’s corporation tax rate the lowest in the G20 – despite a pledge by Donald Trump he would slash the US’s rate from 40 per cent to 15 per cent.

Former chancellor George Osborne had said he would cut the rate to 15 per cent, having already cut it to 17 per cent down from 28 per cent when he took office. The Treasury had since however indicated that the rate was unlikely to fall further past 17 per cent.

Today, in a bid to win over businesses, Ms May however told the Confederation of British Industry’s (CBI’s) annual conference that she would best any other G20 nation on corporate taxes – prompting renewed speculation that Ms May would get into a race to the bottom with Mr Trump.

Also speaking at the CBI, Mr Corbyn said: “The Prime Minister's suggestion that Britain should chase after Donald Trump in a race to the bottom on corporation tax - to 15% or below - I think is reckless and short-term grandstanding.”

The UK’s rate is dramatically lower than its other competitor countries. The United States has a rate of 40 per cent, while Germany’s is 29.9 per cent, Japan’s tax rate is 32.3 per cent, and France’s is 33.3 per cent.

It also comes after calls from business not to cut the tax any further because further cuts have diminishing returns.

A survey by financial services firm PwC published earlier this month found that the majority of businesses they surveyed – 71 per cent- believe the rate should either stay at 20 per cent or not go below the 17 per cent penciled in for April 2020.

“There comes a point when rate cuts have diminishing impact and can send unhelpful messages about business’ contribution, even though corporation tax is just one of the taxes business bears,” Kevin Nicholson, head of tax at PwC, said at the time.

Ms May also today dropped her policy of putting workers on company boards, which she used to justify the claim the Tories were the “party of the workers”. Mr Corbyn said Labour would however implement the policy.

“We need to see genuine employee representation at board level, which the Prime Minister promised but I see she is apparently already backing away from it,” he said