Lib Dems aim to simplify business taxation
The Liberal Democrats are banking on a £50bn remain bonus plus 1% increases in income tax and corporation tax to fund the NHS, free childcare and training wallets for all adults.
The headline for the Liberal Democrat manifesto is uncompromising: “Stop Brexit”, with the sub-heading “Build a Brighter Future”. The full manifesto, constructed around “a £50bn Remain Bonus”, avoids what might sound like a narrow approach.
It concentrates on education, the NHS and seeking to make the economy fairer, partly through a “regional rebalancing programme”, along with efforts to support small and medium-sized businesses through alliances with the banking sector.
There are also plans to utilise technological developments to assist industry and the environment.
A better deal for entrepreneurs and small business
The Lib Dems have announced a series of plans to:
- Create a new ‘start-up allowance’ to help new business with their costs in the early weeks.
- Support fast-growing businesses seeking to scale up through mentoring support.
- Prioritise small and medium-sized businesses in the rollout of hyper-fast broadband.
- Require all government agencies (and associated contractors) and companies with more than 250 employees to sign up to an enforceable prompt payment code.
- Ensure that the company at the top of a supply chain cannot shore up its own cashflow at the expense of smaller suppliers.
- Expand the activities of the British Business Bank, enabling it to tackle the shortage of equity capital for growing firms and provide long-term capital for medium-sized businesses.
- Provide a supportive framework to develop social enterprises.
- Expand the rights and benefits available to those in insecure forms of employment, such as offering parental leave and pay to the self-employed.
- Finance the transformation of town centres by expanding the Future High Streets Fund.
- Help protect high streets and town centres by scrapping the rule which allows developers to convert offices and shops into residential properties without planning permission.
The Lib Dems propose to revamp the business model with a raft of ideas that include:
- Promoting employee ownership by giving staff in listed companies with more than 250 employees a right to request shares to be held in trust for their benefit.
- Strengthening worker participation in decision-making with representation on remuneration committees.
- Encouraging new forms of incorporation and a diversity of business types.
- Requiring binding and public votes of shareholders on executive pay policies.
The manifesto document is relatively light on the detail of tax policy, but it does contain a number of measures that the party wishes to implement.
- Restore corporation tax to 20% (from current 19%) and keep the rate stable.
- Raise income tax by 1% to pay for health and social care, in the longer-term introducing a health and care tax.
- Abolish the capital gains annual exemption and tax gains at the same rates as income.
- Simplify business taxation thereby lowering administration costs and reducing tax avoidance opportunities.
- End retrospective tax changes such as the loan charge and review the proposals to change IR35 (off-payroll working).
- Scrap the marriage tax allowance (presumably this means transferable marriage allowance worth £250 to basic rate taxpayers).
- Replace business rates in England with a “commercial landowner levy” based on the land value of commercial sites rather than their full capital value. The idea is to shift the burden of taxation from tenants to landowners.
- Refund FE colleges for the VAT they pay.
- Take tough action against corporate tax evasion and avoidance (sic), especially by international tech giants and large monopolies by:
- Introducing a general anti-avoidance rule, as opposed to the general anti-abuse rule (GAAR) which has been in place since 2013.
- Setting a target for HMRC to reduce the tax gap and investing in more staff to enable it to meet it.
- Reforming place of establishment rules to stop multinationals unfairly shifting profits out of the UK.
- Improving the digital sales tax to ensure tech giants pay their fair share.
- Supporting and building on the OECD’s proposals to require multinationals to pay tax which is more closely related to their sales in every country in which they operate.
Future of work
The ethos is introduced with the statement that: “People should have secure jobs, with proper rights and fair pay.”
To this end, the Lib Dems wish to institute a review of the Living Wage and introduce a Worker Protection Enforcement Authority.
They also plan to allow flexible working from day one for all, unless there are significant business reasons that prevent this.
The party recognises that current legislation has been outstripped by changes in working practices, particularly the gig economy. The Lib Dems therefore propose:
- Establishing a new ‘dependent contractor’ employment status, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement.
- Reviewing the tax and NIC status of employees, dependent contractors and freelancers to ensure fair and comparable treatment.
- Setting a 20% higher minimum wage for people on zero-hours contracts to compensate them for the uncertainty of fluctuating hours of work.
- Giving a right to request a fixed-hours contract after 12 months for ‘zero hours’ and agency workers, not to be unreasonably refused.
- Reviewing pensions rules so that those in the gig economy don’t lose out and portability between roles is protected.
- Shifting the burden of proof in employment tribunals regarding employment status from individual to employer.
This is a new training and education allowance to be given to every adult in England awarded in tranches: £4,000 at age 25, £3,000 at age 40 and £3,000 at age 55. These amounts can be topped up by employers or local government.
The apprenticeship levy will also be expanded.
Like the Greens, the Lib Dems wish to offer free high-quality childcare for full-time working parents of children from age 9 months to 2 years, and for all children aged 2 to 4 years whether the parents are in full-time work or not.
There is a raft of green issues with a net-zero climate target of 2045.
The tax system will be used as a tool to cut emissions, for example by reducing VAT on electric vehicles to 5%. In addition, air passenger duty on international flights will be reformed, with a higher than normal rate for frequent flyers and a reduced rate for those who only fly once or twice a year.
The party wishes to retain the triple lock on the state pension and ensure that women born in the 1950s do not lose out from recent changes to the qualifying age.
The Liberal Democrats lead their offering with the promise to Stop Brexit, thus providing a £50 billion Remain Bonus.
They are generally supportive of business, although plans to increase corporation tax and income tax by 1% may not please potential voters.
Against that, a desire to favour small and medium-sized businesses, make the gig economy fairer and protect employees should generally be received more positively.