Second Parliamentary petition on IR591
Liberal Democrat MP Brian Cotter has put forward another Early Day Motion (EDM) on the Government's Budget proposal, IR591, and the potential adverse impact it will have on freelancers and small businesses. A similar EDM was recently put forward by Conservative Mark Prisk MP.
Mr. Cotter, who is the LibDem spokesman on small business, is calling on MPs to sign up to the following motion:
EDM 606 - IR591 and small businesses
"That this House condemns the Chancellor's refusal to consult with small firms regarding his announcement on IR591 in the Pre-Budget Report 2003; urges the Chancellor to be open and to publish further details of his plans to 'ensure that the right amount of tax is paid by owner managers of small incorporated businesses'; presses the Government to introduce a proper period of consultation prior to any new legislation that is unveiled; further notes that the Chancellor's excessive tinkering has created an impenetrable maze of taxation law which most small businesses struggle to comprehend; concludes that it would be more sensible to ensure that all forms of income are taxed equally; and therefore calls on the Chancellor to reduce burdens on business by introducing a fair and transparent system of taxation."
IR591 is the name given to the proposals outlined in paragraph 5.91 of the Treasury's Pre-Budget Report 2003. Although no details of the proposal will be available before the Budget on March 17, it does refer to Government concerns about "the longstanding differences in tax treatment between earned income and dividend income" and the Government has, on several occasions, expressed its intention to ensure small businesses pay the right amount of tax.
Splitting the vote or doubling the support?
An EDM is a form of Parliamentary petition, the more signatures, the greater the support and pressure on the Government to take notice. It is not usually a Party political vehicle and MPs from all Parties can choose to add their support - with the exception of Government Ministers who tend not to sign them.
A similar EDM was tabled in January by Mark Prisk and members of the UKTECH network have been encouraging their MPs to add their names in support of this.
There was some concern that by including another EDM on the subject, the signatures would be split between the two rather than grouping behind one petition.
UKTECH asked the LibDems why they had introduced another one, rather than all support the existing EDM.
A LibDem spokesperson said: "Brian fully agrees with the spirit of the other EDM, but feels that it doesn't go far enough in tackling the wider problem regarding the way that the complex taxation system places a burden on smaller firms.
"This is one of the latest in a long line of issues which illustrates the way that the competitiveness of small firms is being undermined by the complexities of the system. Small incorporated firms have already faced problems associated with IR35, which affects hundreds of bona fide contractors and there has also been the debacle regarding Section 660A (the so-called 'husband and wife tax').
"Brian very much agrees that the Chancellor should consult with small firms and be open and honest about the changes that he is proposing, but he also wants to go further in pressing the Government to introduce a fairer system of taxation in the long run. Rather than having a system that is based on the Chancellor's incessant tinkering (which has only proved a headache to him in this case) which results in confusion/burdens for small firms, we would rather have a system which is fair and transparent and which taxes all forms of income equally."
Signatures to date
At the moment, Mark Prisk's EDM (no. 501) 'Owner Managed Businesses' has 109 signatures: Conservative (81); Democratic Unionist Party (2); Independent (1); Independent Conservative (1); Labour (8); LibDems (8); Plaid Cymru (1); Scottish National Party (3); Social Democratic and Labour Party (1); and Ulster Unionist Party (3).
Brian Cotter's EDM (no. 606) 'IR591 and small businesses' has 38 signatures: Conservative (1); Labour (2); LibDems (32); Plaid Cymru (1); and Scottish National Party (2).