Chancellor must "lance taxation burden" on SMEs

A leading business pressure group is calling on the Chancellor to relieve the taxation burden on small businesses in his forthcoming budget on 16th March.

The Forum of Private Business (FPB), has a constant programme of meetings with the Treasury and has been lobbying the Government hard on behalf of it 25,000 members who run small to medium-sized firms. The FPB's Chief Executive Nick Goulding said the FPB has consistently told the Treasury that tax is one of the main barriers to growth for the SME sector.

"The FPB is looking to the Chancellor to address the taxation burden as a matter of urgency,' he said. "The NI contributions hike of one per cent should be scrapped; it has proven to be a direct tax on jobs and actively hampers expansion. Moreover, if Mr Brown committed to integrating PAYE and National Insurance, with an appropriate proportion of the tax designated as NI, this would significantly reduce the onerous administrative burden faced by smaller businesses, while maintaining the integrity of the NI fund."

Mr Goulding said a clarification of employment status would also save smaller firms a considerable amount of time and money.

"Many smaller businesses face problems deciding on the appropriate structure for their business and the tax they will pay as a consequence,' he said. "It causes bureaucratic problems, with evidence suggesting that businesses are spending approximately £2000-a-year on compliance. One solution would be to overhaul the issue of who is employed and who is self-employed. It really would be much more straightforward if self-certification of employment status was introduced."

Stealth taxes are hitting business hard Mr Goulding said.

"The National Minimum Wage (NMW), has increased by 34.7 per cent over the last five years - a figure well above earnings growth,' he said. "Many of our members were alarmed at Tony Blair's recent announcement that the NMW is to increase again in October 2005. They are telling us clearly that further increases will have a negative effect on their business. The FPB urges the Chancellor to scrap the proposed increase to £5.05 and ensure that future hikes will be linked to the retail price index."

Mr Goulding stressed the importance of the SME sector to the UK's economy.

"It is vital the Chancellor addresses the issues that are constraining SME growth and shows that he supports the sector in this critical general election year budget,' he said. "It must not be forgotten that SMEs are the engine room of the UK's economy, with four million businesses contributing £12 trillion to GDP, employing 12 million people and contributing to 37 per cent of UK turnover."