No More Corporation Tax Cuts
When it comes to the public finances the government have cut public services for the many to fund corporate tax giveaways for the few.
After nearly nine years of this government, it’s clear that when it comes to the public finances the Conservatives know the price of everything and the value of nothing. This is particularly evident when considering the Chancellor’s decision to push ahead with further corporation tax breaks for multinational corporations and the wealthiest in our society whilst planning further cuts to public services.
Even the Government’s own supporters are questioning Philip Hammond’s determination to cut corporation tax from 19% to 17% by 2020, which HMRC estimates could cost the Exchequer up to £6.2 billion in lost tax receipts and would make the UK’s corporation tax regime the lowest in the G20. Rupert Harrison, George Osborne’s former advisor, believes the increased cost makes further cuts hard to justify as good value for money, while the British Chamber of Commerce has called for the Chancellor to shelve the cuts and keep corporation tax at its current rate.
In fact, the vast majority of businesses when surveyed oppose further cuts to corporation tax, believing it would be economically irresponsible. This vocal opposition amongst the business community flies in the face of the Chancellor’s claims of popular support and is challenged further by the fact that both business investment and productivity forecasts have been revised down.
The drive for further corporate tax cuts is instead a reflection of this Conservative Government’s ideological fixation with cutting taxes for the well-off and large multinational corporations. Despite missing every economic target they set themselves, by the end of the Parliament, the Government would have handed out £110 billion worth of corporate tax giveaways. While according to the New Economics Foundation the UK economy is £100 billion smaller as a result austerity.
Rather than offering a balanced approach to the stewardship of the economy, the government have presided over a huge transfer of wealth from the poorest in our society to the richest- cutting public services for the many to fund tax giveaways for the few.
This half-baked economic policy is regressive to the say the least. As low levels of public sector investment in the UK’s infrastructure and stagnant wages have fed Britain’s productivity crisis, with UK workers remaining 15% less productive than other major economies. Arguably this has substantially more of an impact on the levels of business investment in the UK than simply the levels of corporate taxation.
At the Spring Statement, the Chancellor should take the opportunity to cancel plans for further corporate tax giveaways and use this money to invest in our public services. If he is unwilling to do so, be rest assured that a future Labour Government will. Labour is committed to ending austerity in a responsible and fair way by asking large corporations to pay a little more.
By Peter Dowd MP, Labour Member of Parliament for Bootle and Shadow Chief Secretary to the Treasury.