FSB warns against small business tax increases

Date: 28th October 2009

The Federation of Small Businesses (FSB) has called on the government not to raise the taxation burden faced by small businesses.

New analysis from the group, which used data from the Centre for Economics and Business Research, suggests that the increases could cause severe damage to the economy as a whole.

For example, raising corporation tax from 21 per cent to 26 per cent is thought likely to result in 100,000 people losing their jobs and an overall reduction in output of £4.3 billion.

Meanwhile, if smaller firms' National Insurance Contributions are increased by 1p, 57,000 jobs could be lost.

John Walker, national policy chairman of the FSB, said: "Taxing small businesses to help reduce the public sector deficit is a dead-end that will instead cost us dearly in jobs and economic growth.

"The FSB has long been saying that small businesses are the country's economic drivers and they cannot play their part in pulling the economy out of recession if they are faced with increasing taxes."

Chancellor of the exchequer Alistair Darling could announce tax hikes in his pre-Budget report, which will be delivered next month.