Business Issues Tax Plea To Osborne

by Robert Lee, Tax-News.com, London

14 June 2010

The UK’s leading business organization, the Confederation for British Industry (CBI), has urged the Chancellor George Osborne to keep any tax rises planned in the forthcoming emergency budget to a minimum.

In a letter sent to the Chancellor by Richard Lambert, Director-General of the CBI, the Chancellor is urged to deal with the budget deficit crisis by cutting public expenditure rather than increasing taxes.

Lambert cited the Conservative party’s own policy when saying that for every pound of tax rises levied to reduce the budget deficit there should be four pounds of public spending cuts. The CBI also called on the Chancellor to abolish the new 50p rate of income tax introduced by the Labour government and to postpone the proposed increase in capital gains tax. Fears are also expressed about the rumoured hike in value-added tax from 17.5% to 20%.

The CBI’s Deputy Director-General John Cridland said: “A radical re-engineering of public services is a must if damaging tax rises are to be avoided. This needs to be a bold and ambitious budget.”

Cridland added: “The UK’s future economic prospects depend on the ability of firms across the country to create new jobs and win orders. Increasing taxes makes this more difficult. The prospect of a new 5-year corporation tax framework, allowing business to plan with certainty, will bring some relief. But any changes to capital gains tax must recognise the importance of incentives for wealth creators and the value of business investment."

The Director-General’s letter stressed the need for the economy to grow whilst taking measures to reduce the budget deficit. In addition to expressing concerns about capital gains tax and the 50p income tax rate the letter raised the issue of lending to small businesses, the proposed taxation of banks and the tax treatment of pensions, which is set to change in April, 2011.

The emergency budget will be announced by the Chancellor on June 22.

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