Your Questions Answered By The Conservative Party.

Mark Hoban, Shadow City Minister, responds to your questions.

Q1. 'Given that all three parties are preaching 'tough love' in terms of increased taxation for banker bonuses, and increased regulation for the City, what incentive is there for bankers to vote for you ?'

A. We want London to be the undisputed home of global finance and to ensure that Britain is competitive and open for business. Our regulatory reforms will strengthen London's reputation as a place to do business. They provide the right framework for greater financial and economic stability.

We are committed to creating the most competitive corporate tax environment in the G20. The first Conservative Budget will include a five year road map for making progress towards that goal. This will provide greater certainty for businesses planning investment decisions, and is a crucial step towards restoring the British tax system's reputation for simplicity, stability and predictability. We will also begin reforming the complex Controlled Foreign Companies rules in order to make UK a more attractive location for multinationals and Foreign Direct Investment. We will also investigate the case for a territorially based tax system so that companies are only taxed on the profits they make in the UK.

We do not believe that the 50p rate of income tax is good for Britain's economy and we have been clear that we do not regard it as a permanent feature. However we could not even think of abolishing it while at the same time asking many of our public sector workers to accept a pay freeze.

Labour's plans to deal with the deficit rely too much on tax rises - we want to reduce the share of the job done through tax rises from one third to closer to 20%, which is what was recommended by the Treasury's own internal study. So all our focus is on reducing wasteful spending and finding savings that will allow us to avoid some of Labour's tax hikes.

Labour plans to increase Employers' and Employees' National Insurance. Instead, we will cut Government waste, stop the increase in Employee National Insurance altogether for everyone earning under £35,000, and halve the rise for employers.

Q2. 'EC legislation already accounts for a substantial amount of law passing through the UK parliament. What are your proposals to ensure that your government wouldn't merely serve as a rubber stamp for the EU ?'

A. A Conservative government would be much more active in Europe, seeking to capitalise on opportunities for UK firms (for example by eliminating barriers to entry to European markets) and protecting our national interests.

We will give a single senior Treasury minister specific responsibility for European financial regulation. That minister will spend as much time as necessary in Brussels, and other EU capitals to ensure that the Government is fully engaged in the legislative process and able to shape the agenda.

We will further strengthen the Treasury's engagement in Europe by enhancing the team dealing with European issues, and beginning a new programme of secondment for UK civil servants in the European Commission.

Q3. 'How to you intend to protect the City's position as a main financial centre for hedge funds, given the EU's proposals for regulation that many feel will result in the industry relocating outside Europe ?'

A. We have serious concerns about the protectionist measures in the Alternative Investment Fund Managers directive. This mess has come about because the UK Government failed to provide leadership or seek alliances when the AIFM directive was being drafted. We are already working with our European allies and consulting with industry to find the best way forward.

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