Conservatives call for business tax break

David Cameron has outlined new tax incentives for businesses who employ people that have been on unemployment benefit for three months or more.

He says the proposals are “fully funded transparent” tax reforms which will create new jobs and fight unemployment as the economy enters recession.

Repeating his assertion that the Conservatives would “not stand aside and allow unemployment to claim livelihoods and ruin lives” Mr Cameron said the policy was fully funded by savings found elsewhere in government spending rather than increased borrowing.

Claiming government borrowing must be brought under control Mr Cameron added: “Having maxed out one credit card is it responsible for the government to get another one?”

Under the Tory proposals, businesses would be offered tax breaks to hire more staff to the tune of £2500 per year per full time employee and £1250 per part time employee. Mr Cameron said the proposed tax breaks could be paid for out of savings made in unemployment benefit.

The Tories suggest it costs the government on average £8000 per person per year for each person claiming unemployment benefit. The money saved from taking someone off unemployment benefit would be put into offering tax breaks to businesses, Mr Cameron said.

But several conditions apply for any business to benefit from the tax breaks. Among these are requirements for the employee to have been recieving unemplyment benefit for at least three months and that only 20 per cent of the company’s workforce would be eligible for the tax break.

Mr Cameron said further government borrowing would leave a future government hampered by having to deal with the “third largest budget deficit in the world” and that a future government would end up having to deal with servicing that debt rather than building schools and hospitals.

He claimed there was also evidence from Canada that offering businesses tax incentives led to job creation, arguing one in three of the jobs created there would not have existed without the tax breaks.

Mr Cameron’s speech was followed by Gordon brown’s monthly press conference.

In a seperate development, Tony McNulty, work and pensions minister admitted to the Daily Politics that taxes may have to rise in the future to pay for borrowing today.

Shadow chief secretary to the Treasury Philip Hammond said: “Finally a government minister has let the cat out of the bag and told us what Gordon Brown refuses to admit. Tax cuts paid for by borrowing today will mean tax hikes and misery in the future for families and businesses.”