Labour pledges to raise UK corporation tax

IN BRIGHTON

ED MILIBAND will today announce a raid on the profits of large UK businesses, as he commits to reversing the coalition’s planned corporation tax cut.

The Labour leader will tell his party’s annual conference in Brighton that his government would scrap plans to reduce corporation tax – the charge levied on companies’ profits – from 21 per cent to 20 per cent in 2015.

Miliband would then use the extra revenue to freeze business rates – the tax levied on commercial property – for two years.

“We need a competitive tax regime for large businesses but my priority is different,” Miliband is expected to say.

“We have to support our small businesses, the vibrant, dynamic businesses that will create wealth for Britain.”

Cutting corporation tax has been a flagship coalition policy and Labour admits that its proposal will lead to British firms paying the exchequer £785m more during the 2016-17 financial year. But the party believes it can win more votes by positioning itself on the side of small businesses.

Miliband’s aides said the plan to cut business rates shows that the party believes that economic growth will come from small companies rather than large City firms.

Retailers, pubs and restaurants have long complained about the burden of rates, which is paid directly to local authorities.

Under Labour’s plan, councils who would be compensated for lost revenue from a central government pot. But the proposed rate freeze would only apply to commercial properties with an annual rental value of £50,000 or less. Scrapping the planned corporation tax cut will affect any firm with profits of more than £300,000 a year, meaning many medium-sized businesses will find themselves thousands of pounds worse off.

The Labour leader will also use today’s speech to announce a housing policy that aides say will breathe life into Britain’s sluggish construction market.

This follows yesterday’s announced by shadow chancellor Ed Balls that Labour would up the levy on banks by £800m a year to fund an increase in childcare provision for under fives.