FPB: Cut taxes, Mr Brown

Chancellor Gordon Brown could revive the British economy by cutting tax on business, rather than raising taxes to fill the looming gap in his public spending plans, according to one small business pressure group.

The Forum of Private Business (FPB) makes its claim in the wake of a report by the influential Organisation for Economic Co-operation and Development, which predicts a slump in the UK economy down from 2.5 per cent to 1.7 per cent growth in the coming year.

This is less than half the growth rate predicted by the Chancellor in the Budget, when he forecast growth of up to 3.5 per cent.

FPB National Spokesman Rex Garratt said: "With British companies paying more than twice as much in taxes as their counterparts in the US, Gordon Brown should take a leaf out of President Bush's economic policy for America and slash taxes that hold back business enterprise."

The FPB claims its members say heavy taxes are their number one cause for complaint and the tax burden has now become intolerable.

Mr Garratt said: "Lifting the heavy hand of taxation imposed on business would unleash entrepreneurial spirit and encourage private businesses to create new wealth and jobs. British companies should not be treated purely as a cash cow by the Government."

Tax burden

According to the latest report from the World Bank, British companies pay more than twice as much in direct and indirect taxes as firms in the US. British businesses pay 52.9 per cent of their gross profits in one form of tax or another. By comparison the tax burden on companies in the US is only 21.5 per cent, in Japan 34.6 per cent and in France 42.8 per cent.

Mr Garratt added: "President Bush has come under attack for his plans to cut taxes in America by critics who say the poor and deprived will suffer. However, we believe our Chancellor could take a leaf out of Bush's policy and cut some of the taxes that hold back economic growth here in Britain."

Taxes such as PAYE, National Insurance contributions, business rates, corporate tax, VAT, capital gains tax, dividend tax and fuel duty are among levies the FPB is calling on the Chancellor to reduce in order to give UK businesses the chance to grow and boost the economy.

Small firms

The FPB said: "Although small firms can now apply for business rate reductions, the vast majority still pay a massive amount of business rates via their local council, and get absolutely nothing in return".

It cited examples of where businesses are charged extra if they want their refuse collected, or if they want to dispose of waste or recycle. They are also subjected to a whole range of additional charges for inspections, licences to trade and certifications.

The World Bank highlighted the complexity of the tax system in Britain, where there are 22 different forms of taxation on British companies. The Bank report suggested the introduction of 'flat taxes' to simplify the costly bureaucratic burden imposed on firms.

The Bank report also relegated the UK from 7th to 9th place in the world for ease of doing business.