Labour rules out raising corporation tax above 25% in next parliament
Labour will not raise corporation tax above its current rate of 25% during the next parliament, the party has pledged, in an attempt to offer businesses greater certainty.
Shadow chancellor Rachel Reeves said the tax pledge included maintaining full expensing, which allows businesses that invest in IT equipment and machinery to claim back up to 100% of the cost of the investment by writing it off against tax on their profits. She said Labour would also maintain the annual investment allowance introduced by Jeremy Hunt.
Speaking at a conference in London attended by 400 business executives, Reeves said business and government must work together “like never before.”
She said: “We reject the calls from those on the right wing of the Conservative party to cut corporation tax. Our current rate is the lowest in the G7. We believe that a 25% rate strikes the correct balance between the needs of our public finances, and the demands of a competitive global economy.
“The next Labour government will make the pro-business choice and the pro-growth choice. We will cap the headline rate of corporation tax at its current rate of 25% for the next parliament. And should our competitiveness come under threat, if necessary, we will act.”
She accused the government of pushing through Brexit without a plan and churning through a succession of ministers that brought instability and uncertainty.
Reeves has sought to woo the business community over several years as part of a strategy to improve the Labour party’s image for managing the economy.
“This Labour party sees profit as not something to be disdained, but of business succeeding,” she said.
The conference, for which tickets sold out within hours, heard that Labour will listen to the concerns of UK firms, overhauling the planning system and investing in green infrastructure.
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Angela Rayner, Labour’s deputy leader, said there would be enhanced rights for workers “because you tell us the a motivated workforce will improve productivity”.
On Wednesday, Reeves said she would not reinstate a cap on bankers’ bonuses scrapped last year by the chancellor, Jeremy Hunt. She said it was a measure that came out of the 2008 financial crisis which was now over.