Business groups and think tanks have urged the government to avoid higher corporate taxes and adopt a more business-friendly agenda ahead of next month’s budget.
The Institute of Directors urged Chancellor Rishi Sunak to oppose the temptation to hike the corporate tax rate to consolidate the UK’s public finances ravaged by Covid.
Jonathan Geldart, director general of IoD, said: “This is not the time to experiment with higher taxes. Tax hikes right now could stifle the economic recovery before it has even started.”
It came after Westminster’s free market activists accused Boris Johnson’s government of anti-business policies.
Mark Littlewood, director of the Institute of Economics, said: “Business-friendly rhetoric by the government is increasingly contradicting the introduction of interventionist measures. Barely a day goes by without a government announcement of further government control of companies or a kite-flight over which taxes should be increased.
“If this government takes economic growth and living standards seriously, it needs to figure out what taxes it will cut and what regulations it will abolish to help the economy recover – and eventually boom. Not just the silence in this one Area is deafening It is not even clear that the government intends to adopt a low tax and easy regulation agenda in the medium term. “
New business secretary Kwasi Kwarteng has come under pressure over a proposal to ban or punish directors of companies who make accounting errors. Senior businessmen said the move would discourage international entrepreneurs and damage confidence at a time when businesses are struggling.
Matt Kilcoyne, deputy director of the Adam Smith Institute, said: “Boris may have come to power on the backs of Tory members won by the bombastic high falutin free market rhetoric, but the actions of the government that he did heads are anything but.
“The government has closed its shops, the Chancellor threatens to levy taxes on companies that survive this bleak winter, the Secretary of Commerce is lining up to hold directors liable and criminal for acts they did not know about. It is economically unjustifiable and it is unjust all round. “
Meanwhile, the IoD encouraged the government to provide a grant package to over a million owner-directors who have had no support from Covid since the beginning of the pandemic.
Mr Geldart said, “Entrepreneurs must be at the heart of government recovery plans. Businesses will create the jobs and drive the innovation that the economy needs to rebuild – and this budget must support them … the budget should give entrepreneurs a shot in the arm by spurring investment in entrepreneurial businesses and encouraging small businesses to invest in technology, retraining, and green growth. Reducing the burden of corporate rates and employer NICs will also help create business margins for business hire and re-scale. “
Bill Grimsey, the former chief executive of Iceland and Wickes, said a different mindset was needed to help UK high street businesses and poured cold water on the idea of a tax on online retailers under scrutiny by the Treasury Department.
Mr Grimsey said, “The government has not done a good job in a while to support the highways and the pandemic has thrown a harsh light on their failures. They have been thinking about reforming corporate rates for a decade.
“They’ve continued to over-centralize and still think Whitehall knows best, not the local communities. And now they think an online tax can somehow revive a 20th century high street model. They keep looking rather the past than the future. “
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