Government warned against raising small business taxes
Thu, 29 Oct 2009
A new report has warned that raising taxes for small businesses would cost the UK employment market hundreds of thousands of jobs.
Commissioned by the Federation of Small Businesses (FSB), the Centre for Economics and Business Research (CEBR) report indicates that increasing employers' National Insurance Contributions (NICs)– as is planned for April 2011 – will cost the economy 57,000 jobs,
In addition, increasing corporation tax from 21 to 26 per cent – establishing parity with larger firms – would see another 100,000 roles disappear, CEBR claimed.
This act would reduce economic output by £4.3 billion over ten years, the report suggests, but lower the public sector deficit by just £1.6 billion.
According to the FSB, many businesses are already operating on very small margins and increasing their costs, either through increased corporation tax or NICs, would "push many of them over the edge".
John Walker, national policy chairman at the FSB, said taxing small businesses to help reduce the public sector deficit is "a dead-end".
"Small businesses are the country's economic drivers and they cannot play their part in pulling the economy out of recession if they are faced with increasing taxes," he added.
"The FSB is calling for a freeze in employers' NICs as the most constructive way of tackling the challenge of rising unemployment."
According to a new study conducted by PricewaterhouseCoopers, the instability of the UK tax regime is a major concern for business leaders.
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