LABOUR defended its plan to reverse a planned cut in corporation tax to pay for help for small businesses today after opponents claimed the move could cost thousands of jobs.
Shadow Chancellor Ed Balls claimed its plans to cut business rates for small firms would save 167,000 businesses across Yorkshire an average of £400 a year.
Labour plans to pay for the policy by reversing the Coalition’s cut to corporation tax which comes into force this month.
Labour Shadow Cabinet Minister Ivan Lewis defended the proposal as he visited Brighouse to support the party’s candidate for Calder Valley, Joshua Fenton-Glynn.
He said: “Our corporation tax level, even after that increase to pay for this support for small and medium-sized businesses will be still relatively low by international standards so it’s affordable.
“But it also sends out a message that at the moment in terms of our economy small and medium-sized businesses are being squeezed, they are having it tough and the Government’s job should be to help those businesses and support them to be competitive.”
He added: “This country has always had a problem with supporting small businesses particularly. Micro-businesses become small businesses and small businesses become medium-sized businesses.
“If you think about the local economy in this part of the world it’s absolutely crucial that support is there to enable that to happen.”
Cutting corporation tax has been a central part of George Osborne’s ambition to make the UK an attractive place for global businesses to invest.
It stood at 28 per cent when the Coalition came to power and has been steadily reduced with a new rate of 20 per cent for this financial year.
Tory Treasury Minister David Gauke said: “This would be the first time corporation tax has risen in over 40 years and Labour’s plans could cost 96,400 jobs - it would put people’s economic security at risk.”
Paul Raynes, director of policy at manufacturers’ organisation EEF, said: “Business rates are an unwelcome and unavoidable cost.
“Many small manufacturers occupy big sites and so pay big rates bills, and will want to know that Labour’s definition of small businesses applies to them, too.”