The UK’s main opposition Labour Party said it would review the country’s business tax regime to boost investment, insisting that the Conservative government’s approach is hampering growth.
(Bloomberg) — The UK’s main opposition Labour Party said it would review the country’s business tax regime to boost investment, insisting that the Conservative government’s approach is hampering growth.
A Labour government would consider changes to capital allowances but would not cut corporation tax, the party said in an e-mailed statement. Labour would also seek ways to encourage more re-investment of profits rather than see companies buy back shares or make dividend payments.
“What businesses need are certainty, consistency and incentives for investment,” Labour’s shadow chancellor Rachel Reeves is due to tell an audience of manufacturing sector leaders at a conference on Tuesday. “Labour will provide that.”
Business taxes are a hot topic for Prime Minister Rishi Sunak’s government ahead of the March 15 budget, with Chancellor of the Exchequer Jeremy Hunt under pressure to scrap a planned hike in corporation tax and give companies more inducements to invest. Sunak plans to push ahead with the tax rise, a person familiar with government plans said on Monday.
Britain’s flagship super-deduction incentive – which gives firms 130% tax relief on capital spending – is due to expire on April 1 and executives want Hunt to come up with a replacement.
Low levels of business investment have been a significant issue for the British economy since the 2008 financial crisis, with the country under-performing the G-7 average and the government struggling to buck the trend.
Labour said it will consider any changes to capital allowances proposed by the Conservatives. Hunt has limited room for fiscal adjustments in his upcoming budget, and is also facing calls for giveaways such as freezing fuel duty and giving households extra help with their energy bills.
“If the government brings forward a genuine boost to investment and if it is affordable, we will back it to get our economy growing again,” Reeves will tell the MakeUK annual conference.
Greg Hands, the Conservative Party’s chairman, said Labour would put up taxes on business, commenting in an e-mailed statement.
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