The British Chambers of Commerce (BCC) has called on the government to scrap next year’s planned increase in National Insurance contributions (NICs) and instead raise revenues by increasing VAT to 18.5%.
The BCC questioned business owners on tax burdens and found that an increase in National Insurance would be the most damaging tax rise for businesses, while 36% thought a VAT rise would be the least damaging increased tax burden.
The lobby group believes a 1% rise in VAT, coupled with targeted spending cuts, would generate roughly the same amount of revenue as the National Insurance increase and be far less damaging to businesses.
“Raising a damaging tax on business, like NICs, will be counter-productive,” said David Frost, BCC director general. “It will mean fewer jobs and less tax revenue in the long-term. While businesses fully understand the need to bring down the UK’s deficit, they are clearly saying that using VAT would be a less damaging way to achieve this.
“So let’s scrap the NICs ‘tax on jobs’ and offset it with a 1% VAT increase. It’s a tough call, but we have to be realistic about repairing the public finances, and promoting recovery.”
The poll also revealed that 41% of businesses believe tackling the deficit should be the government’s number one priority, followed by slashing red tape and making the UK tax system more competitive.
© Crimson Business Ltd. 2010