The British government has made a lot out of its recent Corporation Tax cuts, stating they will be one of the lowest in the G8 group of countries and thus will encourage significant investment in existing and new private sector businesses in the UK.
So lets look at each country and see how it compares:
The UK’s plan is to reduce their rate to 23% over the next few years, which will make them very competitive indeed. However, the UK is not alone in having aggressive corporation tax reductions planned. France has a very low effective rate due to tax breaks and concessions. Germany also has their own plan. It appears that finally governments (even socialist ones) have realised that without private business they can’t keep public spending high. The World is becoming a smaller place and it is very easy for many companies to relocate and use tax planning to avoid the high corporation tax rates. If a country is uncompetitive, business will simply leave and take jobs with them.
As an investor, this is all very welcome progress. Long overdue following the unsustainable excesses of the prior 10-15 years!