Lisa Nandy has argued that “there will be a time for raising taxes, doing it fairly and paying down the debt – but that time is not now” amid reports that the government could raise corporation tax.
In a BBC interview this afternoon, the Shadow Foreign Secretary reiterated that Labour does not support an uplift in corporation tax in the Budget next week but indicated that the party would support increases in the longer term.
She told Politics Live viewers: “We’ve long acknowledged that the corporation tax is below the OECD average and you could raise corporation tax and remain competitive. The problem is trying to raise taxes now on businesses.”
Her comments come after Keir Starmer insisted during Prime Minister’s Questions that “now is not the time for tax rises on families and businesses”. Critics have since pointed out his previous pledge to reverse Tory cuts to corporation tax.
Discussing taxation in the context of the Covid health crisis, Nandy said this afternoon: “Putting up corporation tax hits businesses across the board and that’s what Rishi Sunak and his PR team have been floating in the newspapers.
“It’s caused real concern amongst businesses in my constituency and in many parts of the country because they just simply can’t afford it at the moment. This could be the difference between viable businesses going under and not.”
She also criticised the Chancellor’s management of furlough. She argued it has been “very stop-start” and compared it to the long-term strategy shown by countries such as France and Germany to guarantee wages for years to come.
“We’ve got a situation now where people are being laid off by businesses, who don’t want to do it but because they don’t know if that scheme is about to come to an end,” the Shadow Foreign Secretary explained.
“We need far more certainty and we need a clear approach from this government in line with other major countries in the world that says we’re not going to choke off the recovery before it’s started.
“There will be a time for raising taxes, doing it fairly and paying down the debt – but that time is not now. It would be madness to choke off the recovery in towns like mine before its even begun.”
She told those watching: “We’ve absolutely got to look at the fairest way of paying for this. There are people who’ve done well out of the pandemic… But most businesses who pay corporation tax are not in that position.”
She described the prospect of the government raising corporation tax at this point as “not a responsible course of action” and stated that “the best way you can pay down the debt is to make sure that you don’t wrack up more debt right now”.
“And if you have mass unemployment, if you have businesses going to the wall, then that is exactly what you’re going to see,” she added.
Nandy was not drawn on whether Labour should back a wealth tax or windfall tax for companies that have done well during the pandemic, a measure former Shadow Chancellor John McDonnell called for on Sunday to pay to cancel household debt.
She went on to say that she wanted to see the government “get the taxation burden right” in terms of online companies paying less than those with a physical presence on high streets but highlighted that this has not been suggested by the Chancellor.
Shadow Chancellor Anneliese Dodds will set out her plan for British high streets in a speech this afternoon. The proposals include reversing new Tory planning rules and giving councils new powers to repurpose vacant properties.
Nandy’s comments today follow an interview by shadow financial secretary to the Treasury James Murray on Wednesday, during which he told viewers that during the coronavirus health crisis is “not the time to consider tax rises”.
Shadow Business Secretary Ed Miliband has previously backed increasing corporation tax, which the government is believed to be considering raising from 19% – the fourth lowest among the 37 OECD countries – to 25%.
Keir Starmer pledged during his bid to become the leader of the Labour Party to reverse the Tories’ cuts in corporation tax, and argued that doing so would only affect those making a profit.
One Labour frontbencher told The Guardian on Wednesday that the party should not be against a progressive move to increase corporation tax, while three other shadow cabinet sources reportedly said that they backed the current position.