Keir Starmer under pressure to back corporate tax hike plans | Spring 2021 Budget

Keir Starmer is under pressure to back future corporation tax hikes after a backlash when the Labor leader said he would oppose any new corporation tax in next week’s budget.

Treasury officials are believed to be considering raising corporate profits tax from the current rate of 19% to 25% as the government tries to recoup some of the massive debt incurred during the pandemic, although the increase may be delayed until later in parliament.

During Prime Minister’s Questions on Wednesday, Starmer said, “Now is not the time to raise taxes on families and businesses.”

Shadow Business Secretary Ed Miliband has previously backed moves to raise UK corporation tax – which is the fourth lowest among the 37 member countries of the Organization for Economic Co-operation and Development ( OECD).

Labor appeared to soften its stance on Wednesday night, suggesting the party would support a regular minimum raise later in parliament. A source said: ‘Let’s look at what the Chancellor is proposing: if he’s talking about a gradual increase in corporation tax across parliament to an OECD average, that’s one thing, but we don’t think there should be tax increases at this time where the focus should be on supporting investment and business growth.

This position created some unease within the shadow cabinet. A Labor leader said he thought that would change, saying: ‘Not totally convinced… It’s a fairly progressive fiscal policy which I don’t know if we should oppose. I’m not sure today’s position will be the one we end up with.

But another Shadow Cabinet source said they believed the expected budget increase was “kite flying”. The Labor line was that the tax hikes were wrong “for the time being”, the source said, with any increases in corporation tax due to come into force later in parliament.

Three other shadow cabinet sources confirmed to the Guardian that they support the approach to opposing a corporate tax hike next week. One said: ‘We have said for months that we will oppose any increase in this budget and that is consistent with what we say tax hikes now will stifle our recovery. The Conservatives are turning their backs on business and under new leadership there is a new relationship with business. A source close to Miliband said he supported Starmer’s caution.

On Wednesday, Starmer urged the Prime Minister to act on council tax hikes and business rate relief, saying: “Now is not the time to raise taxes on families and businesses. ” The swap was likely aimed at driving a wedge between Boris Johnson and his MPs, many of whom are likely to oppose a corporate tax hike.

Shadow Treasury Minister James Murray, appearing on the BBC on Wednesday afternoon, said the party would not support any tax hikes. “We are in the middle of an economic crisis, and now is not the time to do this,” he said. “If you have a country where businesses are closing, where people have no money to spend in the economy and where you have no investment in public services and infrastructure, it is not a way to get the country back on its feet.”

A number of Labor MPs have expressed concern over this stance, including Starmer supporters. Stella Creasy said Labor should always come back to ways to make the system fairer.

“A fairer tax system was our ambition before the pandemic, and will be essential to our recovery after we pick up the pieces,” she said. “We have seen several large companies making substantial profits as a direct result of the pandemic – the same companies that will also benefit from the impact of government support to get those affected by layoffs and debt back on their feet.

“But for that to happen, these programs need to be funded now to prevent more families and small businesses from failing. It is only right that we look at our corporate tax rates and our capital gains taxes and ask ourselves how and when those with the broadest shoulders can contribute a little more to the task of rebuilding our nation. .

Another former minister said the party should actively talk about creating a windfall tax for businesses that had profited from the pandemic. “The corporate tax increase does not affect struggling companies,” they said. “It’s economically illiterate.”

Starmer’s comments drew more explicit criticism from the party left. A spokesperson for grassroots group Momentum, which has defended former leader Jeremy Corbyn and criticized Starmer, said: ‘During the pandemic, big companies like Amazon have cashed in while workers struggle to cope. to go out. Labor is expected to support both the corporate tax increase and a special Covid-19 windfall tax for sectors that have made super profits.

Richard Burgon, the former Shadow Justice Secretary who is secretary of the Socialist Campaign MPs Group, said: “The question facing all politicians now is: who is going to pay for this crisis? And if we don’t have an answer to that, then we’re in a position where the Labor Party doesn’t have an answer to one of the biggest questions we face. The Prime Minister rejected my exceptional tax request. But Labor must make it clear that the super-rich corporations that have increased their profits are paying their fair share to end this crisis. »