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UK will not cut taxes below European average after Brexit

Agencies | Updated: 2017-07-31 20:40

UK will not cut taxes below European average after Brexit

Britain's Chancellor of the Exchequer, Philip Hammond, arrives in Downing Street, in central London, Britain, July 17, 2017. [Photo/Agencies]

LONDON - Britain does not intend to lower taxes far below the European average in order to remain competitive after Brexit but rather expects to keep a recognisably European economic and social model, finance minister Philip Hammond said.

Hammond himself had suggested in January that Britain may have to change its economic model to remain competitive in the event that it left the European Union without having secured an agreement on market access.

In an interview with French newspaper Le Monde published over the weekend, Hammond was asked whether Britain would play the low-tax card to remain economically attractive after Brexit.

"It is often said that London would consider launching into unfair competition in terms of fiscal regulation. That is not our project or our vision for the future," Hammond was quoted as saying in response.

"The amount of tax that we raise, measured as a percentage of GDP, is within the European average and I think we will remain at that level. Even after we have left the EU, the United Kingdom will keep a social, economic and cultural model that will be recognisably European."

The comments were markedly different from Hammond's responses in his January interview with German newspaper Welt am Sonntag, which were seen as a thinly veiled threat to use corporate tax as a form of leverage in Brexit negotiations.

Asked directly whether Britain would lower corporate tax, Hammond had said that while he hoped Britain would remain a European-style economy with corresponding tax and regulation systems, it may have to change its model if it left the EU without agreement on market access.

"In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness," Hammond said. "We will change our model, and we will come back, and we will be competitively engaged."

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