Budget 2020: Businesses call for tax simplification and investment in the regions
5th March 2020, 11:53 am
- Business leaders express a clear wish to see the UK tax system no longer be complex and burdensome
- 43% of businesses want the Chancellor to target transport infrastructure improvements in all major cities
- To address the skills demand, 44% believe the government should incentivise school leavers to join apprenticeship programmes instead of going to university
The government must prioritise simplifying the UK tax system even if it means a rise in taxes, according to a pre-Budget poll of businesses by accountancy and advisory firm BDO LLP.
A significant majority (66%) of respondents indicated they would accept a rise in taxes in exchange for a simplification programme, a rise of 18% since the 2018 budget. Of the 66%, one in four (25%) would not introduce a cap on this tax rise, whilst 41% would accept an increase in taxes of no more than 3%. Only 12% of respondents stated that they did not find UK tax complex.
Tax simplification is not the only area that respondents would support a tax increase. One in three (33%) would accept an increase in National Insurance contributions, as long as the funds raised are ring-fenced for social care.
Opinions are divided on how the government should encourage business investment, with over one in four (29%) reluctant to invest until the Brexit dust has settled. Almost a third (29%) of businesses suggest making equity investment tax deductible for individuals, whilst just over one quarter (26%) believe that up-front income tax relief could encourage business investment. However, businesses are more united on how the government should widen the talent pool. Almost half (44%) responded that the government should incentivise school leavers to join apprenticeship programmes instead of going to university, which confirms that the apprenticeship levy introduced in 2017/18 requires a major overhaul.
Following Boris Johnson’s government promising to “supercharge the economy”, a little under half (43%) of respondents believe transport infrastructure improvements in all major cities should be the priority. This appears to be a clear nod to HS2 and reinforces the sentiment that the government should ensure that its policies are not London-centric. Over a quarter (28%) believe that it should be a greater priority to keep tax changes to a minimum until Brexit changes have bedded in.
Commenting on the survey’s findings, Ed Dwan head of BDO LLP in the North West, said: “Businesses are looking for the government to show that it will deliver on its promises of investing in the regions to rebalance the economy and backing entrepreneurial businesses to unleash growth.
“It is encouraging that businesses are looking to the future and appear to support our view that tax simplification is needed to help organisations tackle the challenging landscape.
“The UK tax system has its roots in the 19th century and has grown by adding taxes, reliefs and complex rules. Now is the time for the government to make business easier by simplifying tax and create an attractive environment for businesses to invest and grow to fuel the economy across the UK regions.
“This survey shows that many businesses will accept an increase in tax rates where necessary in exchange for clarity and a clear movement in the direction of simplicity”.
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