When will the treasury change direction over tax? AstraZeneca snubs the UK over its ‘discouraging’ taxes by building new £330million state-of-the-art plant in Ireland
- AstraZeneca criticised the high cost of doing business in the United Kingdom
- Pascal Soriot called for lower corporate taxes and measures to boost growth
Pressure was heaped on the Treasury last night to cut taxes after a global giant delivered a £330million investment snub to Britain.
AstraZeneca criticised the high cost of doing business in the UK, saying ‘discouraging’ taxes were why it was building a plant in Ireland and not here.
A month ahead of Jeremy Hunt’s spring Budget, AZ chief Pascal Soriot joined the chorus calling for lower corporate taxes and other measures to boost growth.
He said his firm had planned a state-of-the-art factory in north-west England but had switched to Dublin as a result of the tax regime. Sir Pascal’s comments sparked fresh calls from Tory MPs and business leaders for the Chancellor to ease a tax burden heading towards a record high.
The corporation tax rate is scheduled to rise to 25 per cent from 19 per cent in April while a generous tax relief scheme for businesses is expected to end.
A month ahead of Jeremy Hunt’s (pictured) spring Budget, AZ chief Pascal Soriot joined the chorus calling for lower corporate taxes and other measures to boost growth
A government source said ministers had offered AstraZeneca £50million to build the plant in the UK but conceded this ‘didn’t compensate’ for a much lower Irish corporation tax rate of 15 per cent.
Internal company issues had also played a role in the decision, the source said.
Sir John Redwood, a Tory former trade secretary, said: ‘Our corporation tax rate is not competitive with the Republic of Ireland to start with and we’re going to make it a lot worse. It’s a very competitive market for big investments. Britain is a great place to come to but we must not tax ourselves out of the game.’
Tory ex-leader Sir Iain Duncan Smith said AstraZeneca’s decision was ‘a serious reminder to the Government about the risks of high tax rates’.
With a valuation of nearly £167billion, Cambridge-based AZ is the second-largest firm on the London Stock Exchange’s FTSE 100 index. It employs 83,100 staff globally, more than 8,000 of whom are in the UK.
The firm won plaudits during the Covid-19 pandemic for manufacturing its life-saving vaccine and selling it on a not-for-profit basis to ensure wider protection from the virus.
Sir Pascal, 63, said: ‘We want to invest in the UK but we need to see supporting policies for the whole industry. You need an environment that gives you good returns and incentive to invest.’
He added that ‘a lower corporate tax rate’ was needed but the levy was ‘unfortunately going up’.
Sir Pascal (pictured), 63, said: ‘We want to invest in the UK but we need to see supporting policies for the whole industry’
AZ had planned to construct the £329million factory near its manufacturing hub in Macclesfield, Cheshire.
But while Britain had world-class research capabilities, Sir Pascal said it lacked regulatory experts and access to green energy to encourage further investment. He also noted that clinical trials for medicines had become more difficult as the NHS struggled with a staffing crisis and a surge in costs following the pandemic.
Business lobby calls for tax breaks that could deliver £52billion annual boost
Both Sir Pascal and Dame Emma Walmsley, chief executive of AZ’s rival GSK, have written to Rishi Sunak warning that government policy is hitting investment decisions.
Liz Truss and Kwasi Kwarteng initially scrapped the planned rise in corporation tax in the ‘mini-budget’ in September. But this was reversed when Mr Hunt took over as Chancellor and sought to calm financial markets.
Mr Hunt’s tax hike plans are also coming under pressure from outside parliament. Tom Clougherty of the Centre for Policy Studies, a centre-Right think tank, said AZ’s decision was ‘a perfect example of how tax rises can be counterproductive, by driving away business and investment’.
Tony Danker, head of the Confederation of British Industry, criticised the plan to raise corporation tax at the same time as scrapping tax breaks on investment.
He called on the Government to drop the ‘tax double whammy’ and prevent the economy ‘stagnating’ in 2023.
A Government source denied that AZ’s move undermined the bid to make the UK a global hub for the life sciences.
They pointed to £3.4billion of recent investments in the UK, including a £1billion vaccine research and manufacturing site for Moderna.
Source: Read Full Article