Labour tax hike plans for UK firms a ‘war on business’
Labour’s manifesto confirmed plans for a hike in corporation tax to 26% and a clampdown on tax evasion.
Labour’s pledges for sweeping tax rises for British firms have been branded a “war on business” amid fears they will hit jobs and growth.
Jeremy Corbyn vowed to “go after the tax dodgers, the bad bosses”, but also hike everyday taxes for business as Labour’s manifesto confirmed a hike in corporation tax to 26%.
It also unveiled plans to slash corporate tax reliefs, cut research and development funding, impose a new tax on multinationals and extend its financial transactions tax.
Under its plans, Labour will raise corporation tax – currently due to fall to 17% next April – to 21% from April 2020, 24% from April 2021 and 26% from April 2022.
Everyday families should see through the cruel punishment taxes on offer John O’Connell, TaxPayers’ Alliance
But Labour said it would introduce a 21% corporation tax rate by 2022 for small businesses with a turnover of less than £300,000 a year.
The TaxPayers’ Alliance said the tax increases were a “war on business” that would end up punishing employees.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Hiking taxes and seizing property will mean abject misery for millions of British families and businesses – if some of these plans are implemented, we can kiss goodbye to the investment we need for post-Brexit prosperity.”
He added: “Enterprise and innovation create jobs and prosperity. Everyday families should see through the cruel punishment taxes on offer.”
Tax expert Genevieve Morris, a partner at accounting and tax advisory firm Blick Rothenberg, said the corporation tax hike was “really disappointing, but not surprising”.
“They don’t seem to appreciate how beneficial the attractive corporation tax rate has been to encourage inward investment into the UK, which then creates jobs and contributes through employers’ national insurance,” she said.
But the lower rate for small businesses was welcomed as a move to help soften the blow for some firms.
Labour also said it would commit to clamping down on tax avoiders and tax evaders and to bolster the power and resources of HM Revenue & Customs.
Excessive intervention in business governance and sweeping tax rises would suppress innovation and smother growth Adam Marshall, BCC
Blick Rothenberg said Labour’s “fair tax” plans are predicted to raise £6.2 billion, but warned it would be difficult to “turn into hard cash”.
“While it’s entirely appropriate to seek to collect more tax in these areas, the practical challenges should not be underestimated,” said Blick Rothenberg’s Heather Self.
Under its plans, Labour would also raise £6.3 billion from unitary taxation on multinationals, though this would need the agreement of more than 100 countries.
Among other levies on firms, Labour also wants to reverse the recent cuts to the so-called bank levy – introduced after the financial crisis on British lending giants.
Adam Marshall, director general of the British Chambers of Commerce (BCC), said: “Command and control isn’t the way.
“Excessive intervention in business governance and sweeping tax rises would suppress innovation and smother growth.”