In the middle of a financial crisis, business tax may not seem like the most important issue, but politicians should ignore it at their peril. Today's FT reports warnings by the chief executive of WPP, which recently moved its tax domicile to Ireland, that more companies will create new holding companies outside the UK unless the Government rethinks its tax strategy. He said:
"WPP is not the first to create a new holding company [abroad] and it
won’t be the last. There are people actively considering it."
Huge deficits may make business tax reduction difficult in the short term, but if it is not carried out, more companies will go, which will only worsen Britain's economic problems. Tough choices indeed, but now is the ideal time for a shake-up of the public sector and a more competitive business tax regime.