Jeremy Corbyn defends plans to hike corporation tax to 26 per cent as the way to tackle Britain's "looming" social crisis

Rebecca Smith
Corbyn said
Corbyn said "continuing tax giveaways to the wealthiest" could not go on (Source: Getty)

Jeremy Corbyn has defended Labour's planned hike for corporation tax, saying it will help to tackle a "social crisis looming in Britain".

The Labour leader revealed plans to raise corporation tax as part of a bid to raise cash for a schools spending spree, earlier this month.

The top rate corporation tax is currently charged at 19 per cent, but Labour said it would increase that in increments, reaching 26 per cent by 2020/21, and raising £20bn.

Read more: Corbyn's plan to hike corporation tax is already under fire

The lower rate of corporation tax, paid on profits below £300,000, would also rise to 21 percent.

Speaking today on the Peston on Sunday programme Corbyn said: "Corporation tax was at 28 per cent in 2010, we are proposing to put it back up to 26 per cent, which is obviously less."

"This government is proposing to reduce it further and actually hand roughly £60bn over to corporations and in tax relief at the top of it, between now and 2022," he added. "We think that instead of doing that, we should be asking those corporations to pay a bit more, and asking the very, very wealthiest to pay a bit more."

The alternative is what, more food banks, more homeless people, more people on housing waiting lists, more queues in our hospitals, and more than a million people already waiting for social care.

There is a social crisis looming in Britain that cannot be resolved by continuing tax giveaways to the wealthiest in our society.

It comes after the Institute for Fiscal Studies (IFS) urged caution over the proposed reforms.

IFS associate director Helen Miller said: "Were rates to be increased, the benefits of additional revenue would need to be weighed against any long run effects on growth. We should always remember that all taxes are paid by people and that workers can feel the effect of corporation tax indirectly though lower wages."

The IFS has pored over both the Conservative and Labour manifestos, saying neither are being honest with voters about the economic consequences of their proposals.

It said the Conservatives had few tax or spending commitments in their manifesto, while Labour proposed significant increases in tax and spending.

However, the IFS warned Labour's plans for paying for its proposed expansion in state activity wouldn't work.

IFS deputy director Carl Emmerson was critical of both options, saying neither manifesto offered the voting public an honest set of choices and did not address the long-term challenges the UK faced.

Read more: May v Corbyn: Neither manifesto is honest, says the IFS

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