Sir Keir Starmer has been accused of another “flip-flop” after ditching plans for a £3billion tax raid on tech giants.
Labour had pledged to slap a 10 percent digital services tax on the revenues of companies such as Amazon and Facebook.
The money raised was set to be used to reduce business rates for small businesses.
But the proposal has been abandoned after warnings it could spark a trade war with the US.
Conservative Party Chairman Greg Hands said: “Labour has virtually no policies and the few they have are always negotiable.”
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Treasury minister Andrew Griffith said: “Another Labour flip-flop – it’s economic chaos. They make promises only to break them straight away – if they can’t run an opposition party, how could they run a country?!”
Tory MP Mark Jenkinson said it was “another U-turn from Sir Flip Flop Keir Starmer and his Labour team”.
He added: “Their policies continue to fall apart under the slightest bit of scrutiny. They’re just not serious.”
It comes weeks after Labour watered down plans to borrow £28billion a year to spend on green industries.
The digital services tax policy was outlined by shadow chancellor Rachel Reeves in 2021 and restated last September.
Under the plans, a two per cent levy on the revenues of tech firms operating in the UK – which are predominantly American – would have been bumped up to 10 per cent.
Labour said it would raise £3.2 billion which would be used to increase the small business rate relief threshold from £15,000 to £25,000.
The party has now said it does not plan to go ahead with the move but denied it was a U-turn.
A Labour spokesman said: “Labour has no plans to raise digital services tax in government, and that mechanism will have disappeared by the time of the next election.
“Our position on the digital services tax referred to the years of 2022/23 and 2023/24, and was a temporary measure entirely within the rules of the international agreement that we would be doing in that time to cut business rates and help our struggling high streets.
“In government, Labour have said that we will scrap business rates and replace it with a fairer more modern system that shifts the burden away from the high streets and more onto online giants. We have said we will set out more details on this ahead of the next election.”
