Business taxes have pushed the UK to a critical ‘tipping point’, CBI warns

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The creation of new business taxes risks undermining the economic recovery, the Confederation of British Industry (CBI) has warned.

The CBI said the Apprenticeship Levy (AL), National Living Wage (NLW) and the growing burden of business rates amounted to a £29 billion raid on companies over the next five years.

Speaking during their Budget submission, Carolyn Fairbairn, Director-General of the CBI, said the taxes introduced in last year’s Summer Budget and Autumn Statement had pushed the economy to a “tipping point”, with some sectors ready to collapse under the “cumulative burden”.

The introduction of the NLW next month is expected to cost businesses an additional £12.6 billion by 2020, when the rate will have increased to £9 an hour. Meanwhile, the AL is forecast to cost £11.6 billion over the next five years.

Ms Fairbairn said: “What is coming over very clearly from our members, particularly in the context of a more fragile global economy – is that any more could really tip investment decisions, could tip growth plans, could tip job creation.”

She has urged policymakers to support business, which she said would be the primary driver of growth around the world.

“Companies are engaging in very constructive conversations within their businesses and with the Government about how to implement the NLW and how to implement the AL, but it’s time for no more, otherwise there is a real risk to prosperity and growth going forward,” she added.

The CBI has outlined a plan in its Budget submission, which it has claimed will “lay the foundations for a prosperous economy”.

It called on the Government to overhaul the “outdated” business rates system by uprating them using the consumer prices measure of inflation, rather than the retail prices index (RPI). The CBI said failing to do so would saddle businesses with an extra £4.8 billion tax burden by 2021. It also requested that the UK’s smallest businesses be made exempt from the tax altogether.

The group also called on the Government to support investment and innovation through improving capital allowances and widening access to research and development incentives.

“The argument we’re making is the best way out of the current situation is to support our businesses to grow, create jobs, pay tax and bring down the deficit… rather than increasing the burdens on business that could prevent that from happening,” she said.

Link: CBI’s Budget Submission