LONDON — Labour are promising a comprehensive review of the U.K.’s business tax regime as the party tries to shore up its economic credentials ahead of the next election.
Shadow Chancellor Rachel Reeves will use a speech to manufacturers’ group Make UK on Tuesday morning to pitch the exercise and tap into what she describes as a “deep sense of frustration” among business chiefs about repeated changes to the tax system.
The announcement comes amid pressure on Chancellor Jeremy Hunt to scrap a planned hike in corporation tax at the March 15 budget.
While Labour also backs that hike — unlike Hunt’s predecessor Kwasi Kwarteng — Reeves will accuse the Conservatives of presiding over “political dysfunction and economic instability,” and sell the review as a chance for more policy stability after a series of shifts.
“In recent years, corporation tax has gone up and down like a yo-yo while the government has papered over the cracks with short-term fixes like the super-deduction,” she will say, referencing a tax deduction meant to spur business investment in capital and which business groups have been calling for an extension of.
The opposition party said its review will look at “a roadmap for tax which lasts over a parliament,” and weigh whether the U.K.’s “current system of capital allowances is fit for purpose in its design and operation, including for small businesses who are crucial for growth.”
Pushing back at Labour, Conservative Chairman Greg Hands said: “We don’t need Labour to do a tax review to know that they’d put taxes up on business. Corporation tax remains lower than it was at any point of the last Labour government.”
