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Portillo: Conservatives cutting taxes for business

Launching the Conservatives business manifesto 'Common Sense for Business', the Shadow Chancellor, Michael Portillo:

During the last four years, Britain has lost two-thirds of the tax advantage that we enjoyed over our European competitors in the mid 1990s.

If Labour were re-elected, their spending plans mean further increases in tax are inevitable. The independent Institute for Fiscal Studies has shown that if public spending grows at its present rate, the Government would have to find an extra £10 billion by the end of the next Parliament.

Let us be clear what this means for British business. A Government that plans to increase public spending by more than the trend growth of the economy is a Government that is actively planning for a diminishing private sector, paying a rising tax bill.

That is an unsustainable policy at any time, but when the international economy is experiencing difficult times, it is especially imprudent.

Our competitors are responding to economic uncertainty by reducing taxes. Gordon Brown is swimming against the global tide by increasing taxes on business.

In today's international markets, policy mistakes of this scale are swiftly punished as capital and talent move to more competitive countries.

The Business manifesto we are publishing today offers a very different alternative.

It sets out how we will manage the economy in accordance with five essential disciplines, and how we will cut five damaging taxes on business during the first half of the next parliament.

The Chancellor's economic rules are a confidence trick on the country. They are designed to sound tough while imposing no constraint on his ability to ride an endless escalator of taxing and spending.

We will ensure that Britain's businesses can plan ahead based on a framework of real economic discipline.

First, we will keep the pound. Joining the Euro would impose on us a single rate of interest for all participating economies. The current rate is too high for Germany, which is combating unemployment, and too low for Ireland and Spain, which are trying to defeat inflation. A single interest rate is likely to be wrong for most places most of the time. Few policy errors could be more severe than imposing interest rates unsuited to our own economic conditions.

Second, we will enhance the independence of the Bank of England's Monetary Policy Committee - guaranteeing that it is proof against political pressure.

Third, we will establish a Council of Economic Advisers to act as a watchdog on the Chancellor's policies on taxation and government spending. It will comment publicly on whether the balance between the two is prudent and sustainable.

Fourth, we will appoint a National Accounts Commission to draw up proper national accounts and put a stop to the Government's manipulation of the accounts to disguise its tax increases.

Fifth, we will end the Chancellor's imprudent policy of increasing public spending by faster than the nation can afford. We will plot a course for the growth of government spending to be within the average rate of growth of the economy as a whole.

These five disciplines will replace the Chancellor's bogus rules, that offer absolutely no constraint on the amount a Labour Government could tax and spend.

And because we will manage the economy with discipline we will be able to cut taxes for businesses, families, savers, pensioners and drivers.

Our manifesto for business contains 5 tax cuts that will give businesses urgently needed relief from the stealth taxes that Labour have imposed on them, because we understand that today's tax increases on business are tomorrow's job losses. Already under Labour, 350,000 manufacturing jobs have been lost.

First, we will cut taxes on petrol and diesel by 6p a litre, 27p a gallon. Virtually every business in this country relies on road transport. So the 30 per cent increase in fuel tax that Labour have introduced is a debilitating blow to their competitiveness.

Second we will cut business rates for small firms, and, in particular for the shops, pubs, garages and post offices that are so important to the livelihood of the rural economy.

Third, we will repeal Labour's new tax on the self employed - IR35. This unfair tax is driving away some of our most creative people - IT specialists who are in great demand from our competitors.

Fourth, we will reverse two other stealth taxes that are making Britain's businesses lose out to their competitors - the Climate Change levy and the Aggregates Tax.

Fifth, we will help fast-growing businesses attract and recruit skilled people by raising from £30,000 to £100,000 the value of share options their employees can receive free of tax, if they work for a business which has a value up to £100 million.

We will manage the economy with discipline and transparency.

Like our global competitors we will bring down taxes.

Britain, under the Conservatives, was acknowledged to be the premier place in Europe from which to do business. Under Labour, that reputation has slipped away. We will restore it.

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