CBI Sounds Warning Over Labour's Plans For Company Taxation

by Jason Gorringe, Tax-News.com, London

22 April 2005

The Confederation of British Industry has warned the Labour government that any plans it might have to raise company taxation would "seriously undermine" British business confidence, in a submission reflecting increasing concern in business circles that firms will face a new round of taxes in the next parliament.

According to reports in the UK media, the CBI has argued that plans to increase the amount contributed to local government funding by companies will have a similar effect on business morale as the 1% rise in National Insurance in 2003.

In a statement to the Lyons enquiry, the CBI commented that it "opposed any increase in tax at this time".

However, Nick Raynsford, local government minister, told the FT earlier this month that he was in favour of higher business rates as a way to reduce the pressure on council tax payers.

Labour's failure to mention business taxation in its election manifesto has also sounded alarm bells among the business community, which fears that tax hikes cannot be ruled out.

Furthermore, news that Chancellor Gordon Brown failed to meet his budget forecast for government borrowing in 2004/2005 by £500 million has added to concerns that tax rises will be unavoidable in the next parliament.

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