06/02/2014 07:03 GMT | Updated 06/02/2014 12:59 GMT

Ken Livingstone Urges Labour To Hit Businesses With Turnover Tax

Stefan Rousseau/PA Archive
London Mayoral candidate Ken Livingstone at Kennington Business Park in south London where he and Labour leader Ed Miliband toured small businesses and met local people.

Ed Miliband has been urged to propose a tax on companies' turnover in a bid to clamp down on "tax evasion and tax avoidance" by former Labour London Mayor Ken Livingstone.

The tax, which would hit companies' annual sales, was put forward by Livingstone in an attempt to counter companies managing to avoid paying corporation tax, as shown by the growing outrage over the amounts of tax paid in the UK by multi-national firms like Amazon, Google and Starbucks.

The former London Mayor put forward the idea in a meeting of the Labour party's National Executive Committee, which was attended by Labour leader Ed Miliband and deputy Harriet Harman.

In a note of the meeting, Livingstone is reported saying that if companies "refused to pay" corporation tax, then "it should be replaced by a tax on turnover", adding that tackling tax avoidance and evasion would amount to 10% of GDP.

"His suggestions will be passed to Ed Balls," the report by Ann Black reads.

Tories leapt on Livingstone's suggestion, with party chairman Grant Shapps telling the Sun that the turnover tax would "knock confidence, meaning fewer jobs, and longer dole queues".

Robin Walker, Tory member of the business select committee, said: "We need to crack down on tax avoidance but there are much better ways of doing it and turnover tax would hit all businesses whether or not they try to avoid tax. It would discourage investment and penalise success."

Ed Balls' spokesman said that Livingstone's turnover tax proposal was not something the leadership was "looking at", adding that the party would instead "close down tax loopholes and cut business rates for small firms."