Labour leader Jeremy Corbyn on Thursday doubled down on plans to raise taxes and unleash a huge public spending drive, sparking fears across corporate Britain of a return to 1970s state intervention.
Mr Corbyn’s new manifesto eclipsed his radical plans from the last general election in 2017 by shifting even further to the left with almost double the scale of additional taxation and borrowing. Paul Johnson, director for the Institute for Fiscal Studies, a think-tank, told the BBC the manifesto would produce “just about the most punitive corporate tax regime in the world”.
The IFS calculated that the plans would push the UK’s tax burden to its highest levels since the second world war. Labour has ramped up its extra borrowing plans since 2017 from £250bn to £400bn over a single parliamentary term in order to fund 1m new council homes, oversee a “green industrial revolution” and upgrade the UK’s infrastructure. The party stepped up its plans for extra taxation from £48.6bn to £82.9bn a year — the vast majority falling on big business and high earners — to fund extra spending on social care, the NHS, schools and scrapping college tuition fees.
Torsten Bell, chief executive of the Resolution Foundation think-tank, said: “Today’s Labour manifesto shows there is a very big choice facing the country on the size of the state they want, and how it should be funded.”
Mr Corbyn used the manifesto launch at Birmingham City University to unveil a host of policies he described unapologetically as “the most radical and ambitious plan to transform our country in decades”.
If Labour wins the December 12 election it will push through a wave of nationalisations — water, railways, Royal Mail, National Grid and Openreach — raise the minimum wage from £8.21 to £10 an hour and introduce “inclusive ownership funds” which would seize 10 per cent of the shares in all big companies and hand them to workers over a decade.
Brent Hoberman, one of Britain’s best known entrepreneurs, who has sat on business advisory councils for both Labour and Conservative governments, described Mr Corbyn’s manifesto as “anti-business”.
“The vast majority of business people, entrepreneurs and even Labour moderates are worried about Corbyn’s manifesto and the impact on business confidence in the UK,” he said. “Britain’s strong position will be put at risk by the grab for 10 per cent employee ownership, overregulation and random taxation.”
Nick Burchett, a fund manager at Cavendish Asset Management, said: “If Labour come to power on this agenda, the UK investment landscape will be time-warped back to the dark days of the 1970s.” The higher tax proposals would mean that “top talent and inward investment into the UK will simply go elsewhere”, he claimed.
Labour has kept its plans from the last election to introduce a higher income-tax rate from £80,000 and a new “super-rich” rate above £125,000
But the document also sets out plans to raise £14bn a year by taxing capital gains at the same level as income tax and also abolishing the lower income tax rate for dividend income.
Mr Bell said there was a strong case for the changes to the taxation of capital gains and dividends, but warned: “The scale of the increase planned means effects will be felt by many people well below the top 5 per cent, including those with pension savings.”
Another £5bn would be raised by reversing recent cuts to inheritance tax, imposing value added tax on private school fees, scrapping the married person’s allowance and introducing a second homes tax.
Mr Corbyn said he accepted his new tax rises would be unpopular with the rich but insisted: “We will make those at the top pay their fair share of tax to help fund world-class public services.”
Labour’s manifesto also confirmed plans to raise corporation tax from 19p to 26p.
The document included a handful of new taxes aimed at big business. There was a new way of taxing multinational corporations, raising up to £5.8bn a year, and a windfall tax on oil and gas companies that could secure more than £11bn.
The oil levy would be used to pay for what Labour described as a “just transition fund” providing an £11bn support package to help retrain 37,000 workers in the industry to “make the transition to a clean economy”.
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