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Report from Labour Conference 2011

A brief report on tax debate and announcements at the 2011 Labour Conference

Labour announced a five-point plan to boost growth, including four temporary tax cuts. The plan was announced by shadow chancellor Ed Balls in his keynote speech on Monday:
• Cut VAT on home improvements, repairs and maintenance to 5% for one year;
• 12-month employers' NICs holiday for new workers taken on by small businesses;
• Temporarily cut VAT back to 17.5%;
• Bring forward investment in "shovel-ready" infrastructure schemes, particularly cancelled school projects;
• Repeat the tax on bank bonuses, to raise £2 billion to fund house-building and jobs for young people.

In his leader’s speech, Ed Miliband said the Government should tax and regulate good and bad firms differently. Miliband drew a distinction between what he called ‘producers’ and ‘predators’. Details of how this would work were scarce but, questioned later in the conference about whether this had ‘a whiff of picking winners’ about it, Miliband denied this, saying it was, for example, about the rules you set for banks – should they serve small businesses or not? And about how you use the tax system. He cited the R&D tax credit introduced by Labour which served to encourage these activities. (See also ‘CIOT question Labour spokesman on business tax proposals’.)

Labour announced that it would exempt financial services from cuts in corporation tax over this Parliament to help pay for its policy of reducing the annual tuition fees cap from £9,000 to £6,000. Despite this announcement, John Denham told BBC News that a graduate tax still remains the party's long-term aspiration.

Shadow Northern Ireland Secretary Shaun Woodward attacked the proposed cut in Northern Ireland’s corporation tax, branding it a "huge gamble". He said that the planned corporation tax could "make a bad situation worse" because of the corresponding reduction in the block grant.

There was plenty of discussion of tax avoidance. During a Q&A session, Ed Miliband committed to closing ‘corporate tax avoidance loopholes that cost us billions every year’. During the same session, Miliband said he was in favour of a Robin Hood Tax, though he seemed hesitant about whether this needed to be global or whether implementing it at EU-level would be sufficient. Shadow International Development Secretary Harriet Harman used her main conference speech to attack tax dodging by multinationals and called for the introduction of country-by-country reporting of profits and tax payments.

At a fringe meeting, Shadow Chief Secretary to the Treasury Angela Eagle hit out at HMRC’s tax agreement with Switzerland, calling it “an absolute disgrace” and saying it was “astonishing that people are being allowed to keep their anonymity”. Eagle called for a new approach to tax avoidance, saying companies needed to be shamed and tax authorities in developing countries empowered.

At another fringe meeting Shadow Pensions Minister Rachel Reeves said the Government should look at redistributing some of the £20bn a year it spends on pension tax relief.

George Crozier
CIOT External Relations Manager
Monday 10 October 2011

NB. George is producing short reports from all three of the main UK party conferences


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