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Labour says business needs a 'fairer' deal on tax Labour says business needs a 'fairer' deal on tax
(about 1 hour later)
Britain needs to be seen as "a great place to do business", with a competitive tax system key to attracting long-term investment, shadow chancellor Ed Balls has said.Britain needs to be seen as "a great place to do business", with a competitive tax system key to attracting long-term investment, shadow chancellor Ed Balls has said.
He said his party would close tax loopholes, freeze some business rates and promote skills through an expansion of technical colleges.He said his party would close tax loopholes, freeze some business rates and promote skills through an expansion of technical colleges.
He also hinted that Labour might make further cuts to welfare spending.He also hinted that Labour might make further cuts to welfare spending.
But the Tories say Labour is "the biggest risk" to economic recovery.But the Tories say Labour is "the biggest risk" to economic recovery.
In a speech to the London Business School, Mr Balls outlined a number of proposals to encourage long-term business investment in the UK and a "fairer" tax system.In a speech to the London Business School, Mr Balls outlined a number of proposals to encourage long-term business investment in the UK and a "fairer" tax system.
"New times demand a new approach," he said. "Not only do we face new challenges from technological change and globalisation, we must also deliver at a time when there is less money around.""New times demand a new approach," he said. "Not only do we face new challenges from technological change and globalisation, we must also deliver at a time when there is less money around."
IncentivesIncentives
Labour is looking at introducing an allowance for corporate equity to counter the current corporation tax system that treats debt interest payments as a deductible expense.Labour is looking at introducing an allowance for corporate equity to counter the current corporation tax system that treats debt interest payments as a deductible expense.
"Such a scheme would offer a strong incentive for long-term investment, building more robust businesses that would be better able to plan for the future," Mr Balls said."Such a scheme would offer a strong incentive for long-term investment, building more robust businesses that would be better able to plan for the future," Mr Balls said.
"We will consult with business and other stakeholders on the case for introducing this reform and how it might be implemented."We will consult with business and other stakeholders on the case for introducing this reform and how it might be implemented.
"We will also examine the possibility of structural changes to the tax system to incentivise long-term investment.""We will also examine the possibility of structural changes to the tax system to incentivise long-term investment."
Mr Ball said industry expert Sir George Cox's report on short-termism in British business recommended a series of reforms including a lower rate of capital gains tax for long-term investors.Mr Ball said industry expert Sir George Cox's report on short-termism in British business recommended a series of reforms including a lower rate of capital gains tax for long-term investors.
"This could complement an allowance for corporate equity by making long-term investment attractive to the investor as well as to the recipient of funding," he said."This could complement an allowance for corporate equity by making long-term investment attractive to the investor as well as to the recipient of funding," he said.
The coalition has repeatedly cut corporation tax since taking office in 2010, when the rate was set at 28%.The coalition has repeatedly cut corporation tax since taking office in 2010, when the rate was set at 28%.
It is due to drop to 20% in 2015-16, the financial year that begins in April - a month before the general election.
'Anti-business''Anti-business'
It is due to drop to 20% in 2015-16, the financial year that begins in April - a month before the general election.
"The last Labour government left Britain with the most competitive rate of corporation tax in the G7, and we are committed to maintaining that position," said Mr Balls."The last Labour government left Britain with the most competitive rate of corporation tax in the G7, and we are committed to maintaining that position," said Mr Balls.
"But unlike George Osborne, we also recognise that companies are just as concerned about other aspects of the business tax regime, such as capital allowances and business rates."But unlike George Osborne, we also recognise that companies are just as concerned about other aspects of the business tax regime, such as capital allowances and business rates.
"That is why, having started and supported successive cuts in corporation tax over the last 15 years down to 21%, we do not think the right priority is a further cut next year."That is why, having started and supported successive cuts in corporation tax over the last 15 years down to 21%, we do not think the right priority is a further cut next year.
"We will, instead, cut and then freeze business rates for more than 1.5 million business properties."We will, instead, cut and then freeze business rates for more than 1.5 million business properties.
"When resources are tight this is a difficult choice to allow us to support more businesses and keep our overall business tax regime competitive."When resources are tight this is a difficult choice to allow us to support more businesses and keep our overall business tax regime competitive.
"The purpose of a competitive tax system must be that companies view Britain as a great place to do business, not simply a cheap place to shift profits.""The purpose of a competitive tax system must be that companies view Britain as a great place to do business, not simply a cheap place to shift profits."
Mr Balls said a major expansion of university technical colleges was needed to produce enough trained technicians in science, technology, engineering and maths to meet demand. 'Arbitrary'
A Labour government would act to tackle tax avoidance, close loopholes and ensure tougher independent scrutiny of the tax system, he said. It would also look at stronger employment protection and restrictions on benefits. A Labour government, Mr Balls added, would act to tackle tax avoidance, close loopholes and ensure tougher independent scrutiny of the tax system.
But Business Minister Matthew Hancock accused Labour leader Ed Miliband and Mr Balls of planning to put up taxes on businesses and jobs. Several senior Labour figures, including Lord Mandelson, have urged leader Ed Miliband to do more to show he backs enterprise amid unease in business circles about some policies - including a planned 20-month energy freeze.
John Mills, one of the Labour's largest private donors, told BBC Radio 4's World at One programme he welcomed the fact the party was now "refining its rhetoric" on business in the run-up to the election.
But former Labour peer Lord Haskins said Mr Miliband was unlikely to enjoy the same backing from business as his predecessors Tony Blair and Gordon Brown following his "arbitrary intervention" in the energy market.
Conservative business Minister Matthew Hancock accused Mr Miliband and Mr Balls of planning to put up taxes on businesses and jobs.
"It's clear that the anti-business Labour Party is the biggest risk to the recovery, to investment and to jobs," he said."It's clear that the anti-business Labour Party is the biggest risk to the recovery, to investment and to jobs," he said.
"Ed Miliband predicted that our long-term economic plan would cost 'a million jobs'. But our tax cuts - paid for by difficult decisions that Labour opposed - have helped firms create two million new jobs - that's two million people with the security of a regular wage and a chance of a brighter future.""Ed Miliband predicted that our long-term economic plan would cost 'a million jobs'. But our tax cuts - paid for by difficult decisions that Labour opposed - have helped firms create two million new jobs - that's two million people with the security of a regular wage and a chance of a brighter future."
Employers group the CBI said a competitive tax system, including an "attractive" basic rate of corporation tax, was crucial for future economic growth.