The Labour Party in the UK has announced its plans to implement higher taxes on e-commerce companies with the aim of providing tax relief for traditional brick-and-mortar businesses. Rachel Reeves, who is in the running to become the party’s finance minister, will unveil this proposal in her speech at the annual conference in Brighton. The Labour Party is seeking to win back supporters who have shifted their allegiance to Prime Minister Boris Johnson’s Conservative Party.
The ongoing COVID-19 pandemic has resulted in significant government spending to support the economy, which has led to a substantial national debt. Surprisingly, polls indicate that the crisis has made higher public spending more acceptable to the public. This presents an opportunity for the left-leaning Labour Party to position itself as fiscally responsible without resorting to spending cuts.
During her keynote address, Reeves will suggest a freeze on property-related taxes for traditional businesses, with the necessary funding coming from a temporary increase in the digital services tax, targeting major online companies. Under Labour’s proposal, the digital services tax would rise to 12% from the current 2% in 2022/23, before being replaced by a global system of minimum taxes that has already been agreed upon internationally.
The government has already outlined its own plans to reform business rates, which are calculated based on property values and are often seen as unjustly burdensome for retailers and hospitality businesses with valuable real estate. However, Labour intends to go a step further by gradually eliminating the current system and implementing a fairer alternative.
Reeves has also introduced new fiscal regulations and emphasized the need for wealthier individuals, including landlords and shareholders, to take on a greater responsibility for financing government spending.
With the next general election set to take place no later than 2024, the Labour Party is utilizing its annual conference to showcase these proposals in an attempt to regain voter support and position itself as a viable alternative to the current government. By addressing issues such as business rates and the taxation of online retailers, the party hopes to appeal to its traditional voter base and establish a reputation for economic stability and fairness.
