Brexit: Angela Merkel warns Theresa May over slashing taxes to undercut the EU

‘We need tax revenues, we need a fair tax system, in order to make necessary investments in our society,’ said the German Chancellor
Angela Merkel has hit back at Theresa May’s threat to slash taxes to undercut the EU if it blocks a Brexit deal, warning taxes are the price paid for a just society.

The German Chancellor insisted her country had no intention of joining a race to the bottom, by following in the footsteps of Britain and Donald Trump.

“We have a tax system in Germany that has weathered challenges well. I see no reason for entering a race for who has the lowest corporation tax,” she said. “We need tax revenues, we need a fair tax system, in order to make necessary investments in our society.”

Her rebuke came as EU leaders, angered by the new US President's outright hostility to the bloc, made clear that the Prime Minister's pitch to be a “bridge to Trump” – particularly over bolstering Nato – was not welcome.

The controversy over tax blew up at the EU summit in Malta after the Prime Minister said she would “change the basis of Britain’s economic model” if she failed to get her way in the withdrawal negotiations.
The comment was widely seen as a threat to turn the UK into an offshore rival to the EU, slashing taxes and regulations in order to lure reluctant foreign investment.

But the UK’s corporate tax rate is already set to fall to 17 per cent – below the EU average – raising accusations that it would have to become a fully-fledged tax haven to offset the damage from Brexit.

At a press conference in Malta, Ms Merkel was asked if Germany would “follow suit” if Britain and America carried on cutting business taxes – making clear it would not.

More on this story at http://www.independent.co.uk/news/uk/politics/brexit-angela-merkel-theresa-may-taxes-warning-eu-a7562021.html

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