Tories called on to take tax initiative

A small business pressure group is calling on the Conservative Party to look at ways of lifting the tax burden on smaller firms if they want to win the business vote as well as encourage a healthy economy.

The Forum of Private Business (FPB) says it is time to put the needs of the small-business employer first. Senior Conservatives, including party leader David Cameron, have so far resisted calls for tax cuts, stating the need for stability in the economy, at their recent conference in Bournemouth.

Tax burden

Campaigns Manager for the FPB, Victoria Carson, thinks that the Conservatives have to commit to tackling tax on smaller firms. She said: "Tax is one of the major impediments to growth for small and medium-sized firms. The Government has pursued policies that increase the burden on smaller firms, which make up the majority of employers in the private sector. If the Conservative Party wants to prove that it represents the needs of smaller businesses, the issue of tax burden cannot be avoided."

The FPB is campaigning to reduce the level of employers' National Insurance Contributions and to link the National Minimum Wage to the Retail Price Index. Ms Carson says those policies would be a real vote winner for smaller businesses.

The FPB would also like to see the threshold for Small Business Rates Relief lifted to entitle more firms to take advantage of the scheme. It would also like to tackle unfair competition in labour-intensive industries, which is caused by some companies having to be registered for VAT and others not. Ms Carson says that firms in labour-intensive industries are missing out.

She said: "Currently, firms are being encouraged to act fraudulently, with companies using the cash economy in a desperate attempt to avoid being priced out of the market. It is also a disincentive to growth – what company close to the VAT-registration threshold would want to cross it and see their prices skyrocket as a consequence?

"There is an EU scheme to reduce the VAT burden on labour-intensive industries, which other member states have taken up. At present, the UK chooses not to take advantage of this option."

Tax on employment

The FPB is also pushing for a reduction in regulations that act as a tax on employment. This month, a fresh raft of red tape on matters including maternity rights, age discrimination laws and an increase in the National Minimum Wage have been introduced.

Ms Carson says that, by taking up policies on cutting or simplifying unnecessary red tape, the Conservatives would effectively be reducing the tax on employment.

She said: "There have been so many new regulations brought in over the last nine years that the Confederation of British Industry has calculated that it has cost businesses around £37 billion. The current environment for small firms is doing nothing to encourage them to expand and employ more people.

"Reducing the number of regulations being brought in and simplifying current regulations would lift the financial burden on smaller firms, increase efficiency and competitiveness, and encourage further employment."