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Party conferences put tax and business in spotlight

THE SEASON of party conferences typically emphasises rhetoric above solid policy, and 2015 has not deviated too heavily from that trend.

That said, some substantive moves were made on the tax and business front, stirring the lobby groups’ commentators and press offices into life. The Conservatives, for their part, have drawn the ire of business over proposals to introduce an ‘apprenticeship levy’.

Formal submissions sent to the government by the Confederation of British Industry (CBI), manufacturers’ organisation the EEF, British Chambers of Commerce (BCC) and the Institute of Directors (IoD) call on the party to row back on the policy. The groups say the move could “undermine the system, not strengthen it” at a time when firms are “already investing over £40bn a year on formal training and increasing apprenticeships”.

George Osborne first raised the prospect in his Summer Budget address, suggesting the imposition of the new tax on larger businesses, with the proceeds funding training schemes at smaller companies.

Alongside that, Osborne promised further devolution of tax powers to the UK’s regions, allowing councils to retain business rates raised in their area and set their own business rates.

Under the plan, councils will be able to cut rates to attract new investment and jobs. At the moment, rates are calculated by multiplying the rental value of a property by either the standard rate of 49.5p or the lower rate of 48p, before subtracting any relief.

Osborne vowed to spark a “devolution revolution” by allowing local governments to keep the rates they collect from businesses. Currently, local authorities collect the rates before they are sent to Westminster for redistribution after central government has taken its cut.

Central government currently takes in about £11.5bn in business rates and redistributes £9.4bn in grants.

Business groups gave the policy a warm reception, with Institute of Directors director-general Simon Walker claiming businesses are “excited about the prospects for devolution”.

Labour’s shadow chancellor John McDonnell used his speech to put plenty of emphasis on the need for a review of HM Revenue & Customs and a ‘Robin Hood’ tax on stock market transactions.

The coalition government fought hard against moves to introduce such a tax during the last parliament, by mounting a legal challenge to the so-called Tobin tax.
The 0.01% levy proposed last term was aimed at shares, bonds and derivatives across the whole EU, and is intended to prevent speculative trading and prompt the financial sector to pay back some of what it received from governments during the financial crisis.

McDonnell is to consult with shadow business secretary Angela Eagle on the tax, but believes it could rein in the excesses of the City and help pay for improvements to the NHS and other public services.

He told BBC Radio 4’s Today programme: “Robin Hood tax at the moment is Labour Party policy on the basis of if we can introduce it globally, and that’s been Labour Party policy for some time now.

“However, what we are saying is that today we are going to launch a review of our taxation system, we are going to bring the greatest economic minds in the world to bear on that issue, we are going to consult with the British people, and then we will arrive at a decision on the way forward.”

McDonnell also announced a review of HMRC to establish how the tax authority can be bolstered in its efforts to collect taxes, particularly the billions lost through avoidance, evasion, fraud and error every year.

He said he intends to examine its “operations, effectiveness and also look at its range of policies and the instruments that it has available to it to ensure that we maximise our tax take and, at the same time, that it’s done on a fair and just basis”.

During his Labour leadership campaign, Jeremy Corbyn claimed the tax gap – the shortfall between tax due and tax collected – stands at £120bn, enough to wipe out the country’s deficit without cutting welfare or spending.

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