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Beware the small print in the budget

We shall be regaled by Osborne yet again tomorrow that this is a budget for growth, with all the paraphernalia of the right-wing media’s propaganda inflating the message for all they’re worth. It is typical of Whitehall and the most slippery of politicians to magnify out of all proportion a theme for which there is virtually no evidence base whilst at the same time ignoring or damping down the elephant in the room that blots out the chosen theme.

It is bizarre for Osborne to rattle on about growth because he’s chopping up planning standards, taking a scythe to environmental regulations, privatising the road system, cutting pay in the poorer regions, and giving millionaires a handsome tax break when at the same time he’s concealing or playing down the overwhelmingly central fact that he’s deliberately ruled out the option of a growth and jobs policy to reduce the deficit in favour of decade-long austerity, the most vehemently anti-growth policy imaginable.

But the real test of the Budget will remain in the small print. If to counter the profound unpopularity of a cut in the top rate of tax for the rich he brings in a general anti-avoidance tax rule or a so-called tycoon tax, it will be wise to look in great detail at exactly how they will operate. The last time Osborne brought in a tax deal with the Swiss on greater transparency, he hailed it as the biggest anti-avoidance measure for decades, whereas analysis afterwards revealed it as the reverse, an even bigger loophole for the super-rich.

And it seems as though he may be about to try the same sleight of hand for the biggest multinational companies. They have always had an incentive to engage extensively in transfer pricing – switching goods or services for the purposes of tax, not at the point at which they were generated, but to a tax haven where the tax rate would be half or a quarter of the UK rate. Osborne is now about to bring in new exemptions so that the arcane controlled foreign companies rules only apply if the tax haven subsidiary can be shown to have most of its dealings with the UK. So if a multinational transfers its brands from, say, Nigeria to Switzerland, its profits on those brands will not be subject to UK tax. Another wonderful wheeze for big business – but keep it quiet, don’t tell anyone.

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