Plans to slash tax and scrap regulations will force the EU to reconsider stalling Brexit talks
The move will force European Union leaders to think twice over stalling over Brexit negotiations as plans are drawn up to slash corporation tax and scrap regulations.
It will act as a sign Britain is determined to become “the new Singapore” unless trade barriers are kept low by the EU.
Brexit plans to curb red tape and lower Britain’s tax rates have privately won support among some Tory minister.
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But Labour leader Jeremy Corbyn has branded the move as transforming the UK into a “bargain basement tax haven”.
The Government has warned the EU it is ready to slash taxes to boost business unless a good trade deal is on the table for Britain in the Brexit negotiations.
Theresa May's Brexit plan Mon, January 16, 2017
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Continued cooperation with the EU to tackle terrorism and international crime.
However Jeremy Corbyn said the move would make the UK into a ‘bargain basement tax haven’
Hints at the plan were tucked away in the Brexit White Paper, which were released this week, indicated ministers were ready to draft laws in a bid to hammer out a decent deal.
The Government is clear that no deal for the UK is better than a bad deal for the UK
Brexit White Paper
It said: “The Government is clear that no deal for the UK is better than a bad deal for the UK.
“In any eventuality we will ensure that our economic and other functions can continue, including by passing legislation as necessary to mitigate the effects of failing to reach a deal”.
Whitehall sources have suggested they are ready to draw up new laws before Brexit talks end to show how serious they are over the threats they have been making.
Philip Hammond vowed Britain will do ‘whatever we have to do’ to keep the country competive
The aim of the Finance Bill is to boost Britain’s business appeal.
A senior Government source told the Telegraph: “This is a two-year negotiating process. As things progress it will become increasingly apparent whether or not we are going to get an agreement.
“As we get closer to the end, we can make arrangements.
“Your Budget is a piece of primary legislation. We have a Finance Bill which enacts the Budget statement.
“What (the White Paper) is effectively saying is that, among other things, there are tax arrangements that we could enact to mitigate things.”
The source said slashing taxes could help Britain’s cause and there were “a number of tools in our armoury” and added: “Labour of course is concerned that we will just slash corporation taxes and engage in what they call a race to the bottom.
“There are those who do think it would not be such a bad thing to be a bit more lower tax and a bit more buccaneering.
“It is called the Singapore option. Having actually been to Singapore, it’s not that bad.”
Brussels is expected to be angered by the move but the draft laws would only kick in if no agreement is forthcoming.
But Treasury sources say the rules are likely to see the lowering of corporation tax rather than personal tax.
Theresa May claimed ‘no deal is better than a bad deal’ for Britain
One insider said: “It is about showing Britain is prepared to take the steps to remain competitive after 40 years in the EU.”
Ex-chancellor George Osborne has warned talks could become “bitter” and tax-cutting measures would not be needed.
But hope still exists that the discussions will not turn sour.
A spokesman for Labour leader Mr Corbyn added: “The Government has let slip its real agenda which is to turn Britain into a bargain basement tax haven off the shores of Europe.
“That’s why Labour has called for a meaningful vote on the final deal: if the government is unable to come up with a deal that puts jobs, living standards and the economy first, it should be sent back to negotiate a better one.”
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