(Updates following speech)
LONDON, March 7 (Reuters) - Britain's opposition Labour
Party, ahead in opinion polls, said it would launch a review
into business taxes with the aim of creating a stable
environment for investments, a chronic weak spot in the economy.
Opinion polls currently put the Labour Party, led by Keir
Starmer, around 20 points ahead of Prime Minister Rishi Sunak's
Conservatives, with the next national election expected in 2024.
Labour criticised the Conservative government's "chaotic"
approach to business taxation, marked by several changes to
corporate tax rates and incentives in recent years that the
party says has deterred investors who seek stability.
British business investment has stalled since the 2016
Brexit vote, lagging behind peers France, Germany and the United
States over the same time frame, according to data from the
Organisation for Economic Co-operation and Development.
In a speech on Tuesday, Labour finance spokesperson Rachel
Reeves outlined plans for the review of business taxes ahead of
the Conservative government's annual budget on March 15.
"What businesses need are certainty, consistency and
incentives for investment," Reeves told manufacturing
association Make UK in London.
Labour says Britain should move in lockstep with the
rest of Group of Seven economies on corporation tax, and Reeves
urged finance minister Jeremy Hunt to resist "the siren calls
from some in his party to cut corporation tax" at the budget.
But she added Labour would support any genuine,
affordable moves in capital allowances that support business
investment, and the party would offer such targeted allowances.
A previously announced increase in the headline rate of
corporation tax, to 25% from 19%, is due to come into force in
April. Hunt has said he wants to cut business taxes, but only
once the public finances allow it.
"In recent years, corporation tax has gone up and down like
a yo-yo while the government has papered over the cracks with
short-term fixes like the super-deduction," Reeves said.
"So it's no wonder businesses are unable to plan, and our
investment rates are cratering."
Labour said its review would look at how the tax system can
incentivise businesses to direct profits into investment, rather
than a short-termist focus on share buy-backs and dividends.
It said its tax plans would comprise a long-term framework
to give businesses certainty over government policy over a
period of years.
In a move that drew comparisons with the Labour government
of the 1960s, Sunak last month launched a ministry for science,
innovation and technology, part of his ambition to create the
world's "next Silicon Valley" in Britain.
(Reporting by Andy Bruce and Alistair Smout; Editing by Shounak
Dasgupta and Bernadette Baum)
Messaging: @brucereuters))
