Investment is the engine of growth. A high corporation tax (CT) rate could deter companies from investing in the UK, stifling entrepreneurship and economic growth. Looking to Ireland’s example of a low CT rate and long-term tax strategy, we see the benefits of such a policy on foreign direct investment (FDI) and job creation.
While the UK has seen an increase in CT rates, leading to higher tax revenues in the short term, the long-term consequences may not be as beneficial. By gradually reducing the CT rate back to previous levels, the UK could attract more investment, create jobs, and stimulate economic growth.
The link between tax rates and tax revenue, as illustrated by the Laffer curve, highlights the potential for increased tax revenues with a lower CT rate. A revitalized UK economy could bring in additional tax revenue from personal and indirect taxes as a result of increased investment and wealth creation.
As the UK aims to recover from the economic impacts of the COVID-19 pandemic, revisiting the CT rate to stimulate investment and growth could be a crucial step. By learning from Ireland’s success and implementing a competitive CT rate, the UK could position itself as an attractive destination for investment and economic prosperity.
