Rachel Reeves Indicates Labour Wouldn’t Hike UK Corporation Tax

Joe Mayes and Francine Lacqua
·2 min read
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(Bloomberg) -- Shadow Chancellor Rachel Reeves indicated she won’t hike taxes on company profits in Britain if Labour wins the next general election, part of a pro-business push as her party seeks to win over voters and investors ahead of an election expected this year.

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“The corporation tax is at a competitive level,” Reeves said in a Bloomberg interview in Davos on Wednesday, when asked if she would rule out raising it. “I’m here in Davos to say to business that with a Labour government we would be not just open to business but actively encouraging investment and wealth creation in Britain and making the argument that Labour today are the party of wealth creation, and we wouldn’t do anything with tax to deter that investment.”

Reeves made the comments at the annual gathering of political and finance leaders in Switzerland, where her agenda included meeting investors at an event hosted by JP Morgan Chase & Co. Britain’s corporation tax is currently at 25%, having risen from 19% in April last year.

With Labour enjoying a commanding poll lead of about 20 points over the governing Conservatives, the party’s economic prospectus is coming under increasing scrutiny ahead of a national vote which is expected in the fall. Reeves, who would run Britain’s finance ministry should Labour win, has so far also ruled out measures such as increasing income tax, capital gains tax or levying a wealth tax.

“We want a competitive rate of tax and we want certainty for business,” Reeves told Bloomberg. “It is Labour that are the pro-business, pro-wealth creation party in Britain today.”

Part of the scrutiny around Labour’s economic plans has focused on their pledge to invest £28 billion ($35 billion) annually in the net-zero transition by the end of the next Parliament, drawing attacks from the Tories who say it would require a significant hike in borrowing to fund. Labour in turn has said the investment would be subject to their own fiscal rules, which require UK debt to be falling as a proportion of the size of the economy within five years.

Reeves’s pro-business pitch at Davos is part of a marked turnaround by leader Keir Starmer as he distances the party from the policies of his left-wing predecessor, Jeremy Corbyn, who alienated corporate Britain with a program of nationalization before leading Labour to its worst defeat since 1935 in the 2019 general election.

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