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Tax roadmap best for businesses
CBI chief says Budget must deliver stability for firms
CBI Director-General John Cridland has called on the Chancellor to use his first budget of the new Government to provide stability for companies of all sectors and sizes.
Mr Cridland is urging the Treasury to lock in the gains made in the previous Parliament by continuing to pursue policies promoting jobs and growth.
The CBI’s submission to the Chancellor ahead of the Budget is calling for:
- Clear detail on fiscal rules and on future deficit reduction to strengthen business confidence
- A commitment to introduce a Comprehensive Business Tax Roadmap that provides clarity on the full range of business taxes to spur on entrepreneurship
- Making the Annual Investment Allowance of at least £250,000 permanent from 2016 to support long-term investment, particularly among small and medium-sized firms, potentially adding £1 billion to GDP by 2020
- A five point action plan to boost productivity through supporting medium-sized businesses (MSBs), investing in talent, improving infrastructure, encouraging innovation and shoring up exports.
John Cridland, CBI Director-General, said: “This is an opportunity for the Chancellor to nail down a range of issues vital to the long-term health of the UK economy.
“Top of his list should be creating stability and certainty that businesses crave. That means building on the gains made in the last Parliament by locking in responsibility from the very beginning.
“We’re looking for detail on the fiscal rules the Chancellor intends to live by and progress on a comprehensive business tax roadmap, to remove complexities and ensure it doesn’t act as barrier to firms with ambitions to scale up.
“Incentivising firms to improve their technology will pay dividends and spur on productivity – that’s why we’re also calling on the Chancellor to see through his commitment on the Annual Investment Allowance, which will provide a fillip for small and medium sized firms.
“Powering ahead on productivity will provide the UK economy with a firmer foundation for future growth.”
The CBI’s package of proposals costs £520 million in 2015/16, rising to £1.9 billion in 2020/21. This accounts for less than 0.25% of government spending, which can be fully funded through efficiency savings.
The Corporate Tax Roadmap set out five years ago was a clear success story, getting the headline rate of Corporation Tax to the joint lowest in the G20 and introducing broader competitive changes.
Building on this with a disciplined approach to tax policy-making, through a Comprehensive Business Tax Roadmap, would provide further clarity across a range of business taxes, including business rates.
The CBI is also calling for the Government to make the Annual Investment Allowance (AIA) permanent at a minimum of £250,000 from January 2016. This would cost £670 million in 2016/17, before rising to £910 million in 2020/21, and could add up to £1 billion to GDP by the end of the Parliament.
Clear fiscal rules and deficit reduction plan
It is essential that this Budget is delivered in a fiscally-neutral setting, so the Government must set out clear fiscal rules which detail the exact nature of deficit reduction to come over the course of this Parliament.
Productivity action plan
The UK’s leading business group is proposing a five point action plan including:
- Supporting MSBs by giving them greater access to long-term growth capital - the Government should build on welcome steps to promote a UK market for privately placed debt and revisit the limits for investments through Venture Capital Trusts. This will encourage targeted investment in MSBs across sectors
- Supporting business in making the best of all the UK’s talent - by closing the gap between the end of maternity pay and the start of Government support for childcare, backing vocational qualifications, and introducing loan support for part-time study to support career progression
- Kick-starting decisions to improve the UK’s infrastructure and build the 240,000 homes a year we desperately need to meet demand - building ten new garden cities over the next decade would be a step in the right direction
- Creating the right conditions to breed innovation by investing in the creation and adoption of new technologies and processes – the Government must reaffirm its commitment to the Industrial Strategy
- Underpinning exporters with access to the right types of finance and insurance to break into new markets, and increasing UK Trade & Investment funding for British firms on the ground in high-growth markets, such as India.
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