The Chancellor is facing mounting pressure from business groups and labour MPs to cut taxes in the upcoming Budget in order to stimulate economic growth and boost business.
The CBI is urging Chancellor George Osborne to implement ‘targeted and modest’ tax cuts in the 21 March Budget, and to deliver proposals he put forward in the Autumn Statement to help the languishing UK economy and increase employment.
Shadow Chancellor Ed Balls has also proposed that ‘significant tax cuts’ should take top priority in next month’s Budget, according to the Sunday Times, calling for VAT and income tax to be cut, and the income tax threshold raised. Tory MP Liam Fox has similarly argued in the Financial Times that the Chancellor should set growth into action by easing business tax and labour legislation burdens.
In its submission to the 2012 Budget, the CBI outlined ‘targeted changes’ to the tax system which could bolster investment into UK infrastructure, small and medium sized enterprises (SMEs), and to get more credit flowing to companies across the UK.
The CBI’s tax proposals include a new capital allowance to attract investment into types of infrastructure which do not currently qualify, and additional forms of finance to encourage company growth and employment. It also wants to simplify environmental taxes to make sure they do not hinder business development.
The latest announcements, as well as suggestions for ‘temporary and targeted’ tax cuts from the Institute of Fiscal Studies (IFS) earlier in February, mean the Chancellor now faces greater pressure to deliver cuts – especially after figures from the Office for National Statistics (ONS) revealed that Government finances for January were in the biggest surplus for four years.
John Cridland, CBI’s director general, said: “With our economy firmly under the international spotlight, there is no time to lose: Plan A plus must become a reality.
“We want to maximise the incentive for businesses to invest in Britain. So we’re calling on the Government to make some targeted changes to the UK tax system, which could make an impact on business decisions and create new opportunities for growth.
“While the state of the public finances is tight, the Chancellor still has an opportunity in this Budget to make sure the UK tax system is as internationally competitive as it can be.”
We will be covering the Budget live on Wednesday 21 March.
