UK Business Unimpressed By Labour's Election Manifesto

by Robert Lee, Tax-News.com, London

15 April 2005

The release of the Labour Party's election manifesto earlier this week has failed to impress Britain's business community, with its lack of commitment to cutting the burden of taxation on the corporate sector.

Dubbed by Prime Minister Tony Blair as "quintessentially New Labour," the 112 page manifesto commits the party to a third successive election pledge to leave personal income tax rates on hold.

However, it is the manifesto's failure to mention other levies, particularly National Insurance, which was increased by 1% in the 2002 budget, that caused alarm within the business community.

"Business tax is the main worry. Employers got their fingers burnt with the last national insurance rise," John Cetizia, political adviser at the EEF, the manufacturers' association, was quoted by the Financial Times as observing.

While the manifesto is intended to set the Labour Party on a path to creating a tax regime "that supports British business," David Frost, director-general of the British Chambers of Commerce warned that companies remain at risk from "ancillary taxes".

Moreover, further evidence that the next government may be forced to raise tax or rein in public spending to reduce a budget gap was presented by the International Monetary Fund in its world economic outlook this week.

The IMF considers that Chancellor Gordon Brown's economic growth predictions are too optimistic, a claim which he has refuted.

"I think the IMF will have to correct their figures at a later stage, as they have had to do before," Brown stated.

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