The UK’s long-term prosperity depends on growing businesses who can provide the high-skilled, high-wage jobs we need to tackle the cost of living crisis. We need to compete as an open, innovative country, producing services and goods so that we can earn our way in the world.This is the route to ensuring that economic growth raises living standards for ordinary people.
To achieve this goal, we need a system of business taxation that attracts long-term investment in high-value industries. The tax system must support the risk-takers who invest for the long-term, setting businesses on the road towards sustainable growth. It must encourage innovation, making sure that people are given the opportunity to develop their ideas, and bring exciting new products and services to the global marketplace. It must be robust, capable of raising the revenues necessary to tackle the deficit, and also fair, providing the level playing field necessary for competition and the restoration of public trust. And it must underpin a broader economic plan that will provide businesses with the skilled workforce and world-class infrastructure that they need in order to succeed.
Labour will maintain the most competitive corporation tax rate in the G7, but that is not enough to deliver long-term prosperity. This document outlines the Labour Party’s approach to business tax reform, setting out four core principles. First, the tax system must attract long-term investment, without which we cannot create the growth necessary for a sustained recovery. Second, we need to kickstart a revival in British productivity by supporting enterprise and innovation, which will deliver improvements in living standards for all. Third, simplification of the tax system and greater predictability is vital if entrepreneurs are to respond to incentives to invest and innovate. And underpinning this all is a commitment to fairness: working both domestically and with our international partners to create a tax system that is transparent and robust, in which tax better reflects the location of economic activity. The challenges facing the UK economy are formidable, but they are not insurmountable. We welcome views from businesses, trade unions, entrepreneurs, tax professionals, international partners and others on how to deliver this agenda, because reforming the business tax system according to these principles will put economic growth on to a more sustainable footing, and reconnect hard-working people’s pay and living standards to national prosperity.
Download our report "Delivering Long-term Prosperity - Reform of Business Taxation" here.
You can also read our earlier paper on Corporate Tax: Transparency and reform.