Ritchie tells us the following:
Let me suggest something. It’s just an idea. I can’t prove it right or wrong. Nor can it, for that matter be disproved. But the suggestion I want to make is that a country’s corporation tax rate might be inversely correlated to its confidence in the offering it has to make to those companies who want to locate their businesses in its jurisdiction.
Hmm. Interesting idea actually. For what the tax rate is will certainly be one of those things that influences people (an idea Ritchie stoutly denies but….). Along with transport, business climate, planning, etc etc.
So we’re given this chart to show it:
Hmm. OK, so we’ve a low corporate tax rate, we obviously are therefore unsure about how attractive we are as a country to business.
Except, except. That is the headline tax rate. And as so much of Ritchie’s “work” shows, the headline rate ain’t the real rate, is it? That’s what all that tax gap stuff is about. The actual, or in the technical term “effective” tax rate is something quite different, dependent on all sorts of allowances and so on. So where are we on effective tax rates?
Oh my. You mean we get more of GDP in corporation tax than do many other countries? And that our effective tax rate is higher than anyone in the Northern Hemisphere?
So the idea that we tax companies lightly rather seems to disappear, doesn’t it? And thus the thought that we are unconfident about our attractiveness and are using low tax rates to compensate: you know, rather like the fat girl being an easy lay to get a date.
I agree that that second set of figures is a little out of date (2009). But even so it’s a very interesting story, isn’t it? The UK has one of the world’s highest tax rates on corporate profits. Slightly mucks up part of the Ritchiebollocks story really.