By Daniel Hunter

Responding to the Labour Party’s proposal to cut business rates by increasing corporation tax, the IoD Director General, Simon Walker, said it is not a price worth paying.

“This is better politics than it is economics, and it creates a false distinction between small and larger businesses when in reality, all companies benefit from a more competitive environment," he said.

"Whilst the IoD welcomes any commitment to reduce the burden of business rates, Labour’s plan to finance this by abolishing the proposed cut in the main corporation tax rate is not a price worth paying.

“The main corporation tax rate is paid not only by multinational corporations and FTSE100 companies but by medium sized companies and smaller firms.

“The government has spent three years telling the world that we are open for business, and reductions in corporation tax have been a key part of that strategy. It’s a dangerous move for Labour to risk our business-friendly environment in this way, at the same time as announcing a new bank levy.

“Globally, corporation tax rates are falling and it is imperative that the UK has an attractive ‘headline’ corporation tax rate low enough to attract much needed foreign direct investment into the UK. This will reduce unemployment, increase economic growth and, as a consequence, increase tax revenues.”

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