Budget & Tax

The British Chambers of Commerce has expressed strongly its concerns over the effects of recent announcements that increase tax burden on business in the UK. This message is especially important, given that most economists continue to view the Treasury's projections of economic growth as overly optimistic, increasing the likelihood that taxes will have to rise further in the next few years to make up for the gap in revenue growth. The Institute for Fiscal Studies also estimates that in order to meet its own self-imposed targets for public sector debt, the Government will need to raise an additional £8bn in taxes at the forthcoming 2008 Budget.

The overall level of taxation, the distribution of the tax burden and the targeting of fiscal incentives in key sectors are equally important issues affecting businesses, as are regulatory obligations they face. Businesses have seen increases in the tax burden in recent budget announcements leading to concerns over the commitment of the Government to the enterprise agenda, and the BCC is worried that this has been damaging to Britain’s entrepreneurial spirit. At the same time as the burden of tax has increased on business, the BCC’s Burdens Barometer shows that the rate of growth in the number of regulations faced by UK businesses and the cost of these regulations continues to increase.

The BCC’s 2008 Budget submission focuses on reducing the burdens on business, both in the level of taxation and the cost of compliance. This is particularly of importance given that the Monetary Policy Committee has acted to alleviate the risk of recession with interest rate cuts to boost business confidence and consumer spending; the BCC feel that it is appropriate for the Government itself to act in support of businesses and ameliorate the effects of the global slowdown on business.

The BCC urges the Government to acknowledge the challenges faced by small and medium-sized business that have borne a disproportionate impact of recent tax policy announcements on business taxation, by freezing the small companies’ rate of corporation tax at 20% and scrapping April’s proposed 2p increase in fuel duty.

Some of the key recommendations of our budget submission are:
  
Tax simplification – particularly integration of NIC and PAYE, as HM Treasury’s evidence based assessment did not consider merging the two forms of tax on earned income that burdens employers in the UK with an administration cost of £283pa;

Limiting the overall regulatory burden - we would also like to see a clearer focus on the quantified benefits outweighing the quantified costs in the RIA process and for this to be the deciding factor in policy making;

Improvement to Train to Gain. SMEs acknowledge the role they need to play to train employees, yet to engage with this scheme employers must fill in up to 22 pieces of paper. Whilst firms with HR departments will be able to do this many SMEs simply do not have the resource;

We need an integrated, sustainable transport system which delivers real choice across different modes of transport and meets the needs of business;

The British Chambers of Commerce remains opposed to relocalisation of the business rate under any circumstance.