Labour has said that they will not raise corporation tax and the Shadow Chancellor Rachel Reeves has said her party are “pro-business.”
Reeves said on Thursday that the current level of corporation tax “strikes the correct balance” which stands at 25%, but this level could fall should the UK’s “competitiveness comes under threat.”
Speaking at a business conference in London with hundreds of bosses Reeves has promised “stability” following years of instability under the Tory government.
Taking questions after her speech, Reeves said, “The reason I said if necessary we would act, we want to stay competitive.
“And so if we found that our competitive edge on corporation tax slip we would look at that, and that’s why we set a cap of 25% rather than locking it at that level, regardless of what our competitors do.”
Reeves told businesses that Labour will bring stability for businesses, she added, “If we expect businesses to invest in Britain, tax rates cannot shoot up and down like a yo-yo according to each political whim.”
The Shadow Chancellor 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 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.
“Be in no doubt. We will campaign as a pro-business party – and we will govern as a pro-business party.”
Reeves said that if Labour wins the next general election there will be a closer relationship between businesses and Westminster.
Reeves said, “This Labour Party sees profit not as something to be disdained but as a mark of business succeeding.”
She added, “We have heard loud and clear the demand for clarity and certainty from business.
“So we will maintain full expensing and the annual investment allowance. And within its first six months, an incoming Labour government will publish a roadmap for business taxation, setting out our plans on business tax over the duration of the parliament.”