The British Chamber of Commerce has warned George Osborne to tread carefully with his plans to increase taxes in today’s budget. UK umbrella companies will also be watching with interest.
BCC director general, David Frost, said that the introduction of damaging new taxes could have a negative effect on growth in the private sector.
Any short-term gains would be offset by a reduction in business investment and a lower job creation rate. He suggests that tax rises should focus on consumption taxes rather than those on business and payroll, such as PAYE and National Insurance.
Frost also believes that the public sector should bear the brunt of any spending cuts so that SMEs do not have to suffer punishing tax hikes.
This view is shared by a lot of business leaders who agree that economic growth would be stunted by a punishing tax regime. 90% of companies would like to see corporation tax lowered and next year’s NIC increase scrapped.
33% of companies would rather see a VAT increase imposed in one go rather than phasing it in gradually. Every time there is a change in the VAT rate, there are additional administrative costs to be borne and by implementing it in one go SMEs would only have a one off additional charge to pay.
Unions, on the other hand, have said that they want to see CGT increase as they believe the rich manipulate it in order to dodge paying taxes.
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