The UK’s Trade Secretary Wants Tax-free Zones, but Labour Condemns the Move

Since Boris Johnson became a major candidate for UK Prime Minister, there has been a discussion of potential tax-free zones. In August, the new trade secretary, Liz Truss, promised to create as many as 10 new tax-free zones. Labour has already condemned this move.

The Plans

The new tax-free zones would be at airports and ports. Involved ports would include London Gateway, Port of Tyne, Milford Haven, and Teesport. Each of those ports and several others could turn into stand-alone economic zones. For all customs purposes, these ports would be independent. As such, they would not charge any tariffs or taxes on imports.

Most other free ports in the world are commonly used for storing high-value items, including antiques, precious stones, and artwork. Locations with free ports used in that way include Beijing, Monaco, Delaware, and Luxembourg. According to the Department for International Trade, free ports are business and enterprise hubs without unnecessary paperwork and checks.

Truss will not be solely responsible for creating plans for the free ports. The others involved are Tom Clougherty, who is the tax head at the Centre for Policy Studies; Emma Jones, a small business network leader; Eamonn Butler, the Adam Smith Institute director; and Daniel Korski, a previous advisor of David Cameron.

The Debate

Those in favor of the plan say that the introduction of free ports would revitalize trading and transport hubs. Some compare it to how Margaret Thatcher revived the London Docklands during the 1980s. A CPS report indicated that the free ports could create as many as 86,000 jobs, assuming they were as successful as similar free ports have been in the United States. This is based on the 250 free-trade zones within the United States that include employment for 420,000 people.

The EU has identified the idea of these tax-free zones as a risk for money laundering, which is the primary concern of opponents. Critics also argue that free ports encourage and facilitate tax evasion and other illegal activities.

There is also the argument that while the free ports will experience a boom in their economies and job growth, this revenue will come from other areas of the country. This can lead to an overall loss of income and hurt employees. Opponents also argue that free ports will not address the likely supply crisis or other issues in any way.

Time will tell whether the UK moves forward with tax-free zones and whether a no-deal Brexit does truly occur.


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