Labour would cut business rates and raise corporation tax
Mon Oct 21, 2013 2:07 PM
Labour would cut business rates for small firms, Ed Miliband has announced at the party’s annual conference in Brighton
The Labour leader said that if the party won the 2015 general election, it would reduce business rates to the level of the previous year and then freeze it for 2016.
The reduction and subsequent freeze would apply to around 1.5 million businesses with properties valued at less than £50,000, and it is estimated it would save them £450 for two years. Announcing the policy, Miliband called Labour “the party of small business”.
The plan would be paid for by increasing the corporation tax that big businesses pay on their profits – in contrast to the Coalition plans to cut corporation tax from 21% to 20% in 2015.
Miliband said: “Since they [the Coalition government] came to office they cut taxes for large business by £6 billion but raised taxes on small businesses. Now I don’t think that is the right priority. Yes, we need a competitive tax regime for large businesses, but frankly they’ve short-changed small business and I’m going to put it right.”
Reaction to the news was mixed. John Allen, national chairman of the Federation of Small Businesses, said: “We welcome today's announcement from Ed Miliband. His personal pledge today shows leadership - freezing business rates and twinning it with a longer-term plan to reduce the burden on small businesses.”
However, Simon Walker the director general of the Institute of Directors, was less positive. “Whilst the IoD welcomes any commitment to reduce the burden of business rates, Labour’s plan to finance this by abolishing the proposed cut in the main corporation tax rate is not a price worth paying,” he said. “It’s a dangerous move for Labour to risk our business-friendly environment in this way, at the same time as announcing a new bank levy.”
Ed Balls’s conference speech earlier this week, in which he suggested that HS2 might be scrapped if costs continue to rise, also drew criticism from some business leaders, with the British Chambers of Commerce director John Longworth accusing Labour of “starting to lose their nerve on transformative investment projects.”