Business taxes up £7.6 billion
Business leaders are warning that the Government’s tax increases has meant that businesses are paying £7.6 billion more into the Treasury since 1997.
The Confederation of British Industry (CBI) announced the publication of a report which aims to challenge ‘the popular notion that the UK burden is lower than international competitors’.
The CBI’s report claims that, by 2005/06, the total annual tax bill for the business sector will be some £7.6 billion higher as a result of the Budget measures since 1997, and under this Government the cumulative total will be £54 billion by 2005/06.
As a share of GDP, Britain’s main business taxes stand at 9.9 per cent, just above the average of our main trading partners. Using OECD figures the CBI highlighted that the UK is on a level with Germany (10.1 per cent) and the Netherlands (9.7per cent), but is worse than the taxation level in the US (7.3 per cent) and Ireland (7.2 per cent).
The OECD’s figures show that only France takes a significantly higher share with business taxes at 14.4 per cent of GDP).
Digby Jones, CBI Director-General, commented: ‘The UK is not as good as it thinks it is on tax competitiveness and it’s certainly not as good as it should be. This report illustrates why so many business leaders are increasingly alarmed by the worsening situation and why the government’s indifference is so frustrating.’
The employers federation highlights that in addition to the increases in main business taxes, the Government has also increased stamp duty, environmental taxes and taxes on investors.
The CBI points out that the burden on business has been raised as pension contributions have increased and there has been a shift from taxes on profits to taxes unrelated to profits, such as labour or energy.
Mr Jones added: ‘The need to fund public services and the need to restrain business taxation are not incompatible. Capital can so quickly drain away from uncompetitive investment locations and once gone it may never return. Better public services will come from better utilisation of government resources, not simply by paying more.’
Conservative Shadow Chancellor, Michael Howard claimed that the CBI’s report confirmed the difficulties that the Government had placed on business.
Mr Howard argued: ‘This makes it incredibly hard for British businesses to win orders and create jobs. Our competitive advantage over the rest of Europe has been undermined and it is little wonder that business investment fell more sharply last year than it has over a decade. This is more evidence that this Government is taxing, spending and failing.’
