On 26 September, the Shadow Chancellor John McDonnell set out some of Labour’s fiscal policies, with the proposed introduction of a £10 Living Wage taking the lion’s share of the press coverage. However, the speech also covered a number of other areas of interest to tax professionals.
On the subject of Brexit, McDonnell announced that a Labour Government would seek to preserve access to the Single Market for goods and services, while addressing the concerns of voters regarding pressure on wages and local public services arising from the free movement of people. Labour also want Britain to keep its stake in the European Investment Bank, and to support access to European markets for financial services. However, Labour will not support the Transatlantic Trade and Investment Partnership (TTIP) or any other trade deal that ‘promotes deregulation and privatisation’.
McDonnell signaled his intention to develop policies to “shift the tax burden more fairly, away from those who earn wages and salaries and onto those who hold wealth” raising speculation that a wealth tax will form part of Labour’s policy on taxation. He also confirmed that a Labour Government would tackle tax avoidance by increasing the staff and resources of HMRC, and would create a new Tax Enforcement Unit at HMRC to investigate wealthy tax avoiders.
Companies engaged in ‘tax-dodging’ would be banned from winning public sector contracts, although it is currently unclear how these companies would be defined. In addition, all British Crown Dependencies and Overseas Territories would be required to introduce a full, public register of company owners and beneficiaries, but in practice it remains to be seen how this could be achieved.
Turning to the subject of business more generally, McDonnell also announced plans to “shake up how our major corporations work and change how our economy is owned and managed”, with the introduction of legislation to stop companies from taking on excessive debt to pay dividends, a rewrite of the Takeover Code to ensure takeovers have clear plans to pay workers and pensions, and giving workers greater opportunities to own and manage companies.
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