Businesses voice concerns on CGT
Large numbers of UK businesses are worried about a possible hike in capital gains tax in the emergency Budget, particularly if the government fails to define an accurate distinction between business and non-business assets.
The concern emerged in a snapshot survey of 1,000 firms carried out by the British Chambers of Commerce (BCC).
Over a half of those polled expressed unease over any substantial rise in CGT.
The survey questioned respondents on a series of other tax issues too.
On corporation tax, nine out of ten of companies backed a lowering of the headline rates at the expense of tax allowances. The BCC itself, however, has argued that the Chancellor should push ahead with its simplification programme only after a proper economic evaluation of the existing allowances and reliefs.
The survey also found that businesses want to see the planned national insurance rise of 1 per cent rolled back in full, with a third of firms supporting such a move “regardless of the cost”.
On the subject of VAT and a possible hike to 20 per cent, half of respondents said it should happen in a single increase. Just over a third voted for a phased increase over several years, while 15 per cent preferred a rise staged over two years.
David Frost, the BCC’s director general, said that “the Chancellor must tread carefully to avoid introducing damaging new taxes that have a negative impact on private-sector growth”.
He warned that short-term revenue gains could be outweighed by longer-term economic consequences, ranging from reduced business investment to lower rates of job creation, and argued that any tax rises must be focused on consumption taxes rather than payroll, income or profits.
Mr Frost added: “The bulk of the measures to reduce the UK’s unsustainable deficit should come from public spending cuts. It should not come from punishing tax hikes on small and medium-sized firms that will drive our economic recovery.
“Crucially, the Chancellor has a unique opportunity in this Budget to talk positively about doing business in the UK – and he can show that this administration is genuinely pro-enterprise.”