Professor Frank Barry:

Not unless the Democrats totally sweep everything over the next ten years. Even then, if they swept everything they would be forced to ask themselves about these changes on which President Obama ran his campaign for the Democrat nomination and on which John Kerry ran his campaign, which are to close off all these corporation tax loopholes, and to ask to what extent it is in their interests overall. It might bring in some extra tax revenues but, as I mentioned in the IEA talk, the US State Department clearly likes having US multinationals everywhere in the world. It is a form of soft power, so what if one closes down what we might call these tax loopholes? Most US investments overseas are funded out of unrepatriated profits. These are profits that remain offshore. If they insist that those profits are repatriated back to America and subject to immediate taxation, there are fewer funds to fund US investment overseas and the State Department is unlikely to like that.

As already indicated, the US State Department is unlikely to like that. I do not envisage dramatic changes on the part of the US. However, I referred earlier to the UK and its patent box. I understand, from informal sources, that we have already lost to the UK some companies which are exploiting its patent box regime. That is a threat. The Germans are quite antagonistic towards the UK's patent box. Spain has also introduced a patent box. The Germans want such boxes closed down so we will be obliged to wait to see that will happen. The threats are closer to home.

There is one other point, namely, that it depends on the sector involved. In sectors such as that which relates to pharmaceuticals we are not competing against other EU countries. We are, in fact, competing against non-EU states such as Switzerland, Singapore, our old friend Puerto Rico, etc. This matter must, therefore, be considered on a sector-by-sector basis. Singapore could certainly introduce dramatic new policies which would reduce our competitiveness in the pharmaceutical sector, which is the key export sector at present.