Pre-Budget report: We need action now - not more talk

Nov 19 2008 by Alistair Houghton, Liverpool Daily Post

Alistair Houghton finds out what the region’s businesses and professional advisers want to see in next week’s pre-Budget report

SEVENTEENTH-CENTURY French finance minister Jean-Baptiste Colbert once said: “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.”

But, at a time of economic downturn, there are fewer feathers and the hissing of the goose has grown much louder.

All businesses have been hit by the shockwaves from the credit crunch, from housebuilders struggling to find buyers for their properties to retailers coping with a slump in customer numbers and companies struggling to get funding from their banks.

Next week, Chancellor Alistair Darling will unveil his pre-Budget report, in which he will reveal measures to help kick-start the economy.

Today, the call from Merseyside firms is loud and clear – they want tax cuts, and they want them now.

The Cheshire-based Forum of Private Business is calling for tax cuts, a reduction in red tape and better bank lending to help small firms ride out the downturn.

The Government is planning to increase the corporation tax rate for smaller firms from 21% to 22% in April. The FPB instead wants that rate cut to 20%.

The organisation wants the Government to keep its commitment to monitor the way banks lend to small firms and ensure that companies can still access the funding they need to survive.

The FPB also wants Small Business Rate Relief (SBRR) to be applied automatically. It says £200m of SBRR goes unclaimed each year because many firms are unaware of it.

FPB member Tim Rhodes, managing director of Skypark Freight, in Liverpool, said: “The Government could do more to promote the scheme – it’s interesting how, when they want money off you, they make it clear what you need to do. But, when the boot is on the other foot, it's impossible to get hold of them.”

The Federation of Small Businesses is also calling for the planned small firms’ Corporation Tax rise, proposed in the last Budget, to be abandoned to give its 215,000 member firms a short-term boost.

It also wants the Chancellor to create a new £1bn Small Business Survival Fund to lend to companies struggling to get loans from increasingly tight-fisted banks.

FSB Liverpool branch chairman Chris Burgess said: “The UK’s 4.7m small businesses need more than talk – we need action. Alongside new funds made available in new ways, we also need to see the Government act immediately to reduce the burden of small companies’ taxation.”

The Engineering Employers’ Federation (EEF) says it expects to see “radical and innovative” tax cuts from the Government.

EEF spokesman Andrew Semple said: “The Bank of England has taken a bold step in recent weeks with their interest rate cuts – our members feel the bank has now passed the baton on to the Government to carry on with radical and innovative policy.