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| Budget 2010: Chancellor 'must encourage private sector growth' |
With George Osborne charged with reducing the UK's significant national debt, company owners across the UK are waiting nervously for next week's mini-Budget.
The chancellor will unveil his financial plans for 2010-11 in the House of Commons on Tuesday (June 22nd) and tax rises are expected to complement the widespread public spending cuts already underway.
But less than six months after the recession ended, the prospect of increased taxation is not one to be welcomed by the business community.
Conscious of the need to encourage growth and company formations, for the overall benefit of the economy, the Federation of Small Businesses (FSB) has urged the chancellor to "think small first" when delivering his Budget.
The lobby group is calling for measures designed to inspire confidence in the future and allow businesses to innovate, grow and employ.
A major FSB demand is that entrepreneurs escape the worst impacts of any Capital Gains Tax (CGT) rise, allowing them to be suitably rewarded for their achievements in business.
Keen to encourage long-term investment in the small business sector, the FSB argues that the current rate of 18 per cent should be retained.
Some commentators have predicted that CGT could reach as high as 40 per cent - limiting the profit-earning potential for business investors.
The FSB has also warned against any sudden increase in VAT, noting that small companies lack the "financial buffers" of larger companies when it comes to absorbing increased costs.
In addition, it has urged the government to consider that National Insurance Contributions (NICS) and PAYE costs are "the biggest obstacle to growth" for small enterprises.
John Walker, national chairman of the FSB, said the chancellor must use the Budget to set out his pro-business credentials and offer something to stimulate growth.
"Private sector growth is the best method of cutting the deficit, keeping taxes low and absorbing the staff that will lose jobs in this round of budget cuts," he claimed.
"It is imperative that any changes to Capital Gains Tax or VAT go hand-in-hand with an ambitious plan for helping economic growth through allowing small firms to employ, grow, invest and innovate."
Mr Walker argued that proposals to give new businesses a National Insurance holiday "do not go far enough" and will not help firms which are looking to expand by taking on new staff.
"By cutting employers NICs payments for established companies that want to take on staff, the government would benefit from the creation of new jobs - and the additional revenue from income tax and employees' NICs contributions that would be paid - while freeing up business cash-flow enabling it to grow," he concluded. |
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