Labour proposes tax cut for businesses in ’emergency’ support package
Labour has proposed a package of “emergency” measures – including an immediate tax cut – to help ease the burden of rising costs on businesses.
The party claims that, under its plans, a typical small factory or workshop would save £2,700, a pub would be £2,600 better off, and the average cafe or restaurant would benefit to the tune of £2,700.
In the long term, Labour said it would scrap business rates and replace them with a system that supports “growth”, which it claimed would be “fairer between the small high street businesses based on bricks and the global tech giants based on clicks”.
The party’s initial proposals consist of a tax cut for small businesses, which Labour said could take effect this week if adopted by the Government; an energy support fund; a “green steel” fund; and scrapping the planned hike in national insurance.
Jonathan Reynolds, the shadow business secretary, said businesses facing “a tidal wave of extra costs” are being “held back” under the Conservatives.
“Action is needed now to ensure firms remain viable and extra costs aren’t passed onto consumers worsening the cost-of-living crisis,” he said.
“Under Labour small firms would be around £2,000 better off from this week through our plans to cut taxes and we wouldn’t penalise small firms for expanding. Labour would back industry with our energy support fund and long-term plans to green the steel industry.
“It’s clear great British businesses can’t afford this Government.”
The party said its analysis shows the current system of business rates is “acting as a tax on growth, with smaller firms facing big tax cliff edges if they expand”.
“A typical hairdresser who expands from one to two sites would see their tax bill go from £0 to £5,000, while an average shop goes from paying £0 to £10,000,” it said.
Labour’s package of emergency measures would include raising the threshold for small business rates relief for a year, from £15,000 to £25,000, from April 1.
Meanwhile, the party’s energy support fund would prioritise energy-intensive industries such as steel, glass and ceramics.
“At least 388,000 jobs are at risk if these factories are forced to close or reduce operations as the price of gas has nearly tripled since last October,” it warned.
The “green steel” fund would “support the steel industry to decarbonise”, the party said, with £3 billion worth of investment in collaboration with business over the coming decade.
The final part of the package would be to scrap the Government’s planned rise in national insurance contributions.
A Government spokesperson said: “No government can control the global factors pushing up prices, but we will act where we can to support businesses.
“We provided an unprecedented package of economy-wide support that saved millions of jobs throughout the pandemic.
“At the spring statement we went further, announcing an increase to the employment allowance which will cut taxes for hundreds of thousands of businesses and a fuel duty cut.
“Eligible high street businesses are also able to get 50% off business rates bills, and benefit from a freeze to the business rates multiplier that puts the brakes on bill increases and is worth £4.6 billion over the next five years.”
Published: by Radio NewsHub