Wednesday, 25 July 2018
Business costs are stifling growth
Businesses are calling on Government to fix the fundamentals rather than focus narrowly on Brexit after a survey revealed that taxes and bureaucracy are stifling growth.
Employers across the East Midlands said Government costs had forced up prices, cut margins, blocked recruitment or caused them to cut or cancel investment.
In some cases, employers said they had made redundancies because of the cost of business rates or taxes.
The Business Taxation Survey by the British Chambers of Commerce found that 25% of firms had put up prices because their business rates had gone up, 23% had accepted lower margins, 20% had cut or cancelled investment and 15% had cut or cancelled recruitment plans.
In response to the same question but based on Corporation Tax, 27% said they’d accepted lower margins, 19% had cut or cancelled recruitment, 18% had cut or cancelled investment and 17% said they’d been forced to put up their prices.
In both cases, four per cent of participating East Midlands’ employers said they had made redundancies while one per cent cited Corporation Tax as causing them to downsize or relocate and six per cent blamed business rates for office changes.
Over four-in-ten (44%) said the overall burden of tax administration and compliance had significantly increased in the past five years with a further 35% saying it had slightly increased.
Asked which business costs they would like the Chancellor to ‘fix’ in the Budget later in the year, 44% said Corporation Tax, 41% said Dividend Tax, 37% wanted revisions to VAT, 36% cited National Insurance contributions for employers and 32% said business rates.
Insurance Premium Tax, National Insurance contributions for employees and Personal Income Tax should also be looked at, the survey found.
The British Chambers of Commerce network carried out the survey between April 11 and 25. Over 100 East Midlands business took part.
Scott Knowles, Chief Executive at East Midlands Chamber*, said: “There are some costs to business that we have long-said need to be addressed, the broken business rates system being principal among them.
“We’ve never seen the sense of a ‘tax’ on business that is based on the perceived rental value of the property they occupy, takes no account of a firm’s ability to pay and financially penalises companies that invest in plant or premises. Businesses are the creators of jobs and wealth and should be encouraged to invest, not discouraged by a punitive tax system.
“We would support the view that in his final Budget before Brexit the Chancellor should seize the opportunity to cut the burden and cost of commerce in the UK to encourage inward investment and proclaim to the world that UK plc is and always will be open for global business.”Back