Monday March 3, 12:16 AM
UK business lobby groups call on Darling to abandon tax rises in budget
LONDON (Thomson Financial) - UK business lobby groups have beseeched Chancellor of the Exchequer Alistair Darling to abandon plans to bring in a raft of tax hikes in this year's budget, in light of the ongoing economic uncertainty.
The British Chambers of Commerce and Confederation of British Industry are both calling for Darling to acknowledge that tough times lie ahead for the UK economy and refrain from increasing the tax burden faced by UK firms.
'The economy is set to slow down considerably this year and the last thing business needs is to be squeezed further by the government,' said David Frost, director general of the BCC, noting that the planned tax changes would levy an extra 3.4 bln stg on UK businesses.
Darling outlined in last October's pre-Budget report proposals to introduce a single 18 pct rate of capital gains tax for all gains above 1 mln stg, upping the small companies corporation tax and introducing a 2 pence rise in fuel duty.
Many of these plans have provoked a wave of criticism from businesses, bringing into question the government's record as being business-friendly.
'A range of poorly consulted and badly thought through policies have sent an adverse message to the business community, which threatens to erode enterprise and the spirit of entrepreneurialism in the UK,' said Frost.
'This Budget gives the government the chance to regain the initiative and show that it still can lay claim to being on the side of entrepreneurs', he added.
The CBI is proposing that in light of the uncertainty facing the economy, the Chancellor should strip the Budget down to the 'bare necessities' to reflect the government's lack of room for manoeuvre.
In an alternative speech drawn up by the group, Darling is asked to say the economic climate means it is impossible to make 'credible judgements on the near-term outlook'.
'Calling on the Chancellor to set aside the normal Budget theatricals in favour of a slimmed down, practical statement may seem fanciful, but our suggestion, made more in hope than expectation, reflects turbulent times both at the Treasury and in the UK and wider world economy,' said CBI director general Richard Lambert.
'Firms have had enough unexpected change to the corporation tax system. Consumers meanwhile are already struggling with significant reductions in their disposable incomes, so further constraints would only make matters worse,' he added.
In addition, the CBI said the burden placed on the Treasury by the Northern Rock (LSE: GB0001452795.L - news) crisis, along with the wider turmoil in the banking sector, means there is a risk that any new proposals would not be subjected to a thorough enough impact assessment.
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