Ed Miliband will today announce plans to increase corporation tax and use the proceeds to reduce rates for small businesses if Labour wins the next election.
Corporation tax is due to fall from 21 per cent to 20 per cent in April 2015, but today the Labour’s leader will pledge to reverse the cut should his party win back power, according to the Financial Times. Corporation tax was 28 per cent when the coalition first came into power.
The paper reports the move will generate around £1bn over two years, which Labour will use to reduce business rates on properties and commercial premises with an annual rental value of £50,000 or less.
Miliband reportedly believes the move would save 1.5 million small businesses nearly £450 over two years.
But Confederation of British Industry director general John Cridland told the FT it would make more sense to overhaul the “outdated” system of business rates rather than reverse the cut to corporation tax.
He tod the paper: “Reducing corporation tax has been one of the coalition’s greatest achievements, sending a clear signal internationally that the UK is open for business.”