Jessica Fino 19 Jan 2017 04:39pm

Theresa May warns business to pay its fair share of tax

Prime minister Theresa May has urged businesses to demonstrate leadership by “playing by the same rules” and warned companies that they should pay their fair share of tax

Speaking at the World Economic Forum in Davos, May said that better corporate governance would help the UK be "the best place to invest of any major economy”.

The prime minister used her speech to argue that business must play by the same rules when it comes to tax and behaviour, pointing out that trust in business stands at just 35% among the poorest people in the UK.

She also suggested that the Brexit vote was “no rejection of our friends in Europe”, nor was it an attempt to undermine the EU itself. “It remains overwhelmingly and compellingly in Britain’s national interest that the EU as an organisation should succeed. [Brexit] was simply a vote to restore, as we see it, our parliamentary democracy and national self-determination," she added.

Also in Davos, chancellor Philip Hammond said that, if “political retribution were to triumph over economic logic” the UK would do “whatever is necessary” to ensure the country remains competitive after Brexit.

“That is not a threat, it’s a statement of the blindingly obvious,” he said.

“We recognise that we won’t achieve a deal overnight. But it is in nobody’s interests either to prolong uncertainty or for there to be a cliff-edge for business or a threat to stability as we transition to our new partnership with the EU.”

ICAEW chief executive Michael Izza, who attended the event, said, “Brexit is still an issue of tremendous interest. Little new has been said, but uncertainty remains high. At a lunch for British business leaders the chancellor was clear the government will work with Europe but their first duty is to the UK economy and citizens.”

He said that there was a “real buzz” among US businesses that president-elect Donald Trump could do positive things for the economy, “whether that is a deregulatory agenda or infrastructure investment”.

He added that people were left reflecting on Chinese president Xi Jinping's speech. “His message on global free trade could have been given by any Western leader until recently. Could we see China step into the void that would result from a protectionist America?”  

May's speech in Davos follows Tuesday's announcement that the government intends to exit from both the EU customs union and the single market.

She said the Brexit vote meant the UK faces a period of “momentous change” and will need to “forge a new role for ourselves in the world”.

In response, Labour leader Jeremy Corbyn said, “Theresa May’s vision for Brexit is now clear: a bargain basement Britain on the shores of Europe based on low pay and deregulation.

“This week we heard the prime minister threaten to turn Britain into a tax haven, slashing corporate taxes and workers’ rights in an all-out race to the bottom.

“People won’t be taken in by warm words. This Conservative government is backed to the hilt by wealthy elites, lines the pockets of its friends and resists all practical steps to make a fairer Britain work for all”.

Earlier on Wednesday, mayor of London Sadiq Khan used his Davos speech to warn that “a hardline approach to Brexit may hold the Conservative party together, but it could rip Britain apart”.

Khan added, “And if we continue on this path – towards a hard Brexit – we risk having to explain to future generations why we knowingly put their economy, their prosperity and their place on the world stage in such peril.”

Tim Farron, leader of the Liberal Democrat party, said, “The prime minister certainly has a brass neck. She goes to Davos to lecture businesses about looking after the little guy yet she threatens to turn the UK into Europe’s biggest tax haven.

“This shows, yet again, that this Tory government are treating our country like UK plc. They are running our economy like it is a closing down sale. But higher prices and more expensive fuel mean families will feel the brunt of this government’s bad economic policies.”

Ana Arendar, head of Oxfam's inequality campaign, said the charity welcomed May’s remarks about the benfits of globalisation and fair taxes. "The prime minister should act now to make UK-linked tax havens introduce public registers of company ownership, which would help to stop poor countries losing out on vital billions that could fund schools and hospitals."