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11 March 2003
The Institute of Directors (IoD) has found that businesses in the UK feel they are paying more taxes than ever, and that many firms are planning to shed jobs and increase prices.
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In a survey conducted by the IoD, 80% of companies questioned said they would be forced to cut costs or increase prices as a result of the extra burden being placed on them by the Treasury. The imminent rise in National Insurance is causing particular concern, and the extra £4 billion that will be paid in contributions will be severely felt throughout the economy, according to the IoD.
The poll also highlighted the failure of the government's system of tax credits, a particular favourite policy of Chancellor Gordon Brown. Apparently, 78% of firms interviewed said that the tax credits had not benefited them since their introduction over the last few years.
With the Working Tax Credit, which is due to replace the Working Families Tax Credit after the 2003 Budget, the survey found only four in ten business were prepared for the change, citing increasing confusion over the Treasury's rules concerning the tax break. Another worrying statistic from the survey suggests that only 23% of firms plan to absorb the extra costs of higher taxation and administrative burden in full, inevitably leading to higher prices and job cuts.
Derek Brownlee, tax executive at the IoD, said: "At a time when taxes have increased, and are set to increase yet further, our survey reveals widespread discontent with current UK fiscal policy and the administrative burdens which accompany it."
Whilst one IoD member commented to the Daily Telegraph "The more we are taxed for employing people the less people we will employ," Ruth Lea, head of the Institute's policy unit, summed up feeling amongst IoD members and employers in general saying: "The figures say it all - 79% of UK businesses are now paying more tax, with only 3% paying less. Equally, 77% are spending more time and money on tax related administration."
