Labour is backing a global minimum corporation tax. The opposition party will force a vote of MPs on the proposal today, via an amendment to the finance bill. The policy is being promoted by Joe Biden, who will put it forward at the G7 summit being held here next month. With Germany, France, Canada, Italy and Japan all reacting positively to the suggestion, Labour wants to highlight that Britain is now the only country not backing the plan. Though the US Treasury has most recently floated a 15% rate (as a floor from which to build), Biden initially put a 21% figure on the table, and this is the one Labour is going with today as its amendment orders Rishi Sunak to review the impact of a 21% rate being applied in 2022 and 2023.
The main emphasis from Labour is on tax avoidance. The party says if the UK government refuses to back the proposal, it will be undermining a global deal to tackle avoidance – while also allowing British businesses to be undercut by multinational corporations and online giants. But the Tories, of course, have their own line of attack. Sunak has pledged to raise corporation tax to 25% in 2023. Didn’t Labour oppose this move not long ago? “This is not the time to consider tax rises,” shadow ministers said at the time of the Chancellor’s Budget. They made the argument that a debate around changes in the long run is welcome, but changes to rates in the short term amid the Covid recovery are not.
What does Labour’s support for this proposal say about the party now? We know that Keir Starmer’s Labour is very keen to work with Biden’s team on everything from policy ideas to electoral strategy to campaign tools. There are Labour staff calls with the Democrats and tips shared across the pond, such as social media ads being run past focus groups. Starmer and Lisa Nandy have talked publicly about the parallels. LabourList understands there have been early talks between the parties’ economic advisers, and Rachel Reeves as the new Shadow Chancellor is eager to draw inspiration from Biden’s bold agenda – particularly the ideas aligned with Labour values that can attract broad consensus, such as this one.
The poor election results earlier this month have brought into sharp focus what Labour has been missing: a clear, positive message. The need for a fairer level playing field is widely accepted; advisers are now just looking to find the right language and tone with which to communicate a big offer. Labour is backing the global minimum corporation tax because it sees a time-sensitive opportunity being presented at the G7. This is a chance for the UK to show leadership and ambition, Labour says. But the policy also touches on vision stuff, namely protecting the British high street. This is at least as important as jobs if we consider the ‘Red Wall’ voters Starmer is trying to win over, and – along with investment in care as social infrastructure – it would make for a strong rival to Tory ‘levelling up’ rhetoric.
Over the weekend, Labour members in Batley and Spen selected Jo Cox’s sister Kim Leadbeater as their candidate for the upcoming by-election from a shortlist of three. “I’m the candidate the Tories fear,” she said. And on the Sunday shows, Nick Thomas-Symonds called on the government to fix the ‘traffic light’ system, for all amber list countries to be moved to the red list and for essential travel only to be permitted. There is a meeting of Labour’s national executive committee tomorrow and LabourList will be following developments in parliament this week before recess. Sign up to LabourList’s morning email for everything Labour, every weekday morning.