By Nicholas Earl
Labour has called for a hike the digital services tax to fund a £1bn support scheme for struggling businesses.
It is also in favour of an increase in the business rates threshold for small businesses saving high street businesses – raising it from £15,000 per year to £25,000 per year, at a cost of £1.1bn.
The opposition party estimates that the increase in the rate of the digital services tax would raise at least £2.1bn – paying for the support measures.
Leader Keir Starmer wants to support energy intensive industries such as ceramics, glass and steel during the ensuing cost-of-living crisis.
Currently, the digital services tax is a two per cent levy on money made by search engines, social media services and online marketplaces catering to UK users.
The Office for Budget Responsibility predicted in March that that tax would raise £700m this year.
To raise an extra £2.1bn, this would require vast increases to the levy or a widening of its role in the market.
The pledges comes alongside new analysis from Labour, which revealed almost half of all businesses have stated that rising prices are their biggest concern.
Unlike households, businesses are not protected by the price cap or support packages unveiled by the government, and are instead exposed to higher prices through contract arrangements.
Jonathan Reynolds , shadow secretary of state for business and industrial strategy said: “Like households, many firms need help to weather this crisis. Businesses are facing a tidal wave of rising costs. They need real solutions now, not a return to the rolling blackouts of the 70s.”
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