Government should listen to small firms

by The Editor at 09:53 12/05/08 (News on Business)

Following a recent Government announcement that a new ‘tax forum' is to be set up to tackle the problems of the UK's tax system, a small business pressure group has claimeds that, once again, the Government is snubbing small businesses.

In a statement, HM Treasury said that the group would be made up of no more than ten senior representatives of multinational companies, and concentrate on their needs. The Forum for Private Business (FPB) believes that it should be the UK's smaller firms, which suffer most because of the disproportionate tax burden, that are placed at the heart of any consultation on taxation. Representation It is not the first time there has been criticism of the absence of representatives of smaller businesses on Government groups. Following extensive lobbying, the Government announced recently that a small business working group would be created within the Business Council for Britain, a body that advises the Prime Minister, Gordon Brown, and which is exclusively made up of representatives from big businesses, including Tesco boss Sir Terry Leahy, and celebrity entrepreneurs such as Sir Alan Sugar and Sir Richard Branson. The FPB believes that small businesses must be given the opportunity to influence policies on taxation as a matter of urgency. Taxation While the tax rate paid by bigger companies was cut in the 2007 Budget, smaller firms' corporation tax has gone up from 19 per cent to 21 per cent over the last 12 months, and will increase further in April 2009, to 22 per cent. Combined with an increase in employers' National Insurance Contributions (NICs) in 2003, the FPB claims these changes have hindered the productivity and competitiveness of many smaller firms. Advertisement The FPB's Policy Representative, Matt Goodman, said: "We can accept that the large multinational companies have more complex tax concerns than most small businesses, but the impact that higher taxes have on our members is just as damaging. "Doing a better job of consultation, and discussions with the taxpayer, would help them understand the reasoning and process behind tax changes. By that logic, the Treasury should consider putting together a similar group focused on the process of small business taxation." Following a survey of the FPB's members ahead of the 2007 Comprehensive Spending Review, 67 per cent of respondents said that reversing the decision to increase small firms' corporation tax would encourage them to reinvest in their businesses. Further, 49 per cent indicated they would have extra funds to invest in skills and training, and 47 per cent said they would be more likely to seek to grow their businesses. Further FPB research revealed that 97 per cent of respondents believed that the Government's tax changes had made the UK a worse place in which to do business. -- If you wish to comment on this article, please log in and use the Reply button below. Registering is simple and easy to do online - see 'Join Shout99'. -- The Editor

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