Labour to simplify tax for businesses
Shadow Chancellor Rachel Reeves has pledged to provide incentives for businesses to invest, rather than cut corporation tax.
She said she would also review the business rates regime to lower taxes on ‘bricks and mortar’ businesses and equalise the tax burden on online businesses.
Speaking at the Make UK annual conference, Reeves said Labour’s mission to achieve the fastest growth in the G7 would back incentives to support supply chains in the UK.
She said Chancellor Jeremy Hunt’s first Budget next Wednesday (15 March) should ignore “siren calls” from Conservative MPs demanding a cut to corporation tax, claiming targeted tax breaks would prove more effective.
She said: “I would prioritise incentives to support investment, because if businesses make profits – I want business to make profits – it’s up to them what to with those profits, to use those profits for share buybacks or dividends, or to use that money to invest. It’s the investment that I want to encourage and incentivise, because it’s investment that results in productivity gains and economic growth, and that is what we desperately need in Britain.
“I would resist, if I were the chancellor, the siren calls of some in his party to cut corporation tax, but instead if there is money available to use that to have support and incentives for investment.”
Reeves said: “Corporation tax has gone up and down like a yo-yo while the government has papered over the cracks with short-term fixes like the super-deduction. That adds up to 22 changes to our corporation tax arrangements in just three years since the start of this Parliament. So it’s no wonder businesses are unable to plan, and our investment rates are cratering.”
She said she would prioritise stability in business taxation and that Labour will undertake a review of business taxes, but stopped short of previous Labour promises to scrap business rates. “The review will look at how we can build more stability for businesses in the tax system, and drive that crucial investment forward. And as we await next week’s budget, let me say this: We will look closely at what the government proposes on capital allowances in that budget; And I am urging the government to show they understand the need to support business investment as part of that.”
Reeves said she would back the government to get the economy growing again if Hunt were to bring forward “a genuine boost to investment” in next week’s Budget.
“But stop-go tax policy is no more than a sticking plaster. What businesses need are certainty, consistency and incentives for investment. Labour will provide that,” she said.
The shadow Chancellor also said a better trade deal with the EU was possible: “We would work with our neighbours and our allies to make practical changes, not going back into the single market or the customs union, but changes we can make at pace to improve exports and get investment back into Britain.”