The Shadow Chancellor will say that Labour’s first Budget will cut business rates for 1.5 million small business properties and then freeze them the following year.
On a visit to a small business today, Ed Balls will publish Labour’s plan to deliver a fairer and simpler tax system for small firms.
This is part of what Labour are calling their "Better Plan for Small Businesses", which they say includes action to tackle late payment, reducing unnecessary regulation and establishing a British Investment Bank to boost lending to small firms.
Over the course of this Parliament the Conservative-led Government is set to have spent more than £7 billion cutting the main rate of corporation tax to the benefit of large companies. But new figures published by Labour today show that since 2010 revenue from business rates has gone up by almost £3 billion and that higher business rates have cost firms an average of £1,500 a year.
Labour say they will lower the tax burden on small businesses with a cut in business rates – worth an average of £400 – rather than going ahead with another cut in corporation tax for large firms. This will benefit 17 small business proprieties for every one business helped by a further cut in corporation tax. And we will look to go even further as we prioritise small businesses for future tax cuts.
Shadow Chancellor, Ed Balls, is expected to say: "Unleashing the potential of smaller businesses to grow, create more good jobs and raise living standards is a vital part of Labour’s better plan. Because when working people and British businesses succeed Britain succeeds too. That’s why Labour’s first Budget will back Britain’s small firms and our struggling high streets by cutting business rates. And we will look to go further by putting small businesses first in line for future tax cuts. This is part of our plan to deliver a simpler and fairer tax system for small businesses."
Mr Balls is also expected to say: "Under the Tories higher business rates have cost firms an average of £1500 a year and are an ever bigger part of their tax burden. So instead of another corporation tax cut for large companies which helps fewer than one in ten firms, we will cut and then freeze business rates for small firms instead. This is the right priority when money is tight. And it will mean that the tax burden on small businesses will be lower with Labour than under the Tories.
"As well as cutting business rates our plan will also tackle late payments, reduce unnecessary regulation and boost lending to SMEs who want to grow with a proper British Investment Bank. Every large business started off as a small business and I want to ensure smaller firms have the support they need to grow, invest, innovate and raise their productivity. Our plan will help small firms create more high skilled, high paid jobs which are vital to raising living standards."
Labour say their plan to'back Britain’s small businesses' will:
- Put small businesses first in line for tax cuts. We will cut and then freeze businesses rates for 1.5 million small business properties with a rateable value of less than £50,000. Labour’s plan means the tax burden on small businesses will be lower than under the Tories. We will look to go even further as we prioritise small businesses for future tax cuts. Our policy document today will also set out further ways in which a fairer and simpler tax system for small businesses can be created.
- Tackle late payment. We will tackle late payment with a new requirement on larger businesses to set out the extent of late payment they have been responsible for, and the action they have taken to compensate suppliers. We will also give business organisations like the Federation of Small Businesses the right to take cases on behalf of their members.
- Ensure Britain has the most competitive rate of corporation tax in the G7 and continue supporting the Employment Allowance. Labour called for action on National Insurance Contributions in 2011 and the Government finally acted in 2014. Their mechanism, the Employment Allowance, is now bedded in so we will keep it and build on it.
- Establish a proper British Investment Bank to boost lending for small businesses to grow and create jobs. All funds raised from the planned increase in the licence fees for the mobile phone spectrum - estimated to be up to £1 billion in the next Parliament, subject to Ofcom consultation – will be allocated to Labour’s British Investment Bank.
- Increase competition in the banking sector so that small firms get a better deal, following the Competition and Markets Authority inquiry. We want to see at least two new challenger banks and a market share test to ensure the market stays competitive for the long term.
- Reduce unnecessary regulation by asking our new Small Business Administration – which the FSB has called for – to co-ordinate work across government to benefit smaller businesses and cut unnecessary regulation. Labour’s SBA will be given a remit to ensure regulations or requirements on small business are proportionate, appropriate, avoid any unnecessary burdens or compliance costs and are designed from the perspective of the smaller firm.
- Deliver a long term roadmap for capital allowances and incentives for research and innovation like the R&D tax credit, not just for the headline rate of corporation tax.
- Improve support for entrepreneurs and SMEs who want to grow rapidly. Leading British entrepreneur Simon Franks, who co-founded Love Film, is conducting a review for Labour on how we can best support early stage and high growth businesses which we will publish in the coming months.