Govt has 'failed to reduce business tax burden'

Date: 8th June 2011

Small businesses have not seen the tax burden they face improve in the last 12 months.

That is according to a recently-published report by the Institute of Directors (IoD), which claims the coalition has not improved the overall tax burden on businesses during its first year in power.

Figures from the study, entitles Tax – The Weighty Burden, have revealed that the burden on businesses is "far greater" than the corporation tax rates of 20 and 26 per cent suggest.

Indeed, the IoD claims that smaller businesses "suffer" a true tax rate burden of between 32 and 43 per cent.

Richard Baron, head of taxation at the IoD, said: "The private sector is going to have to drive the recovery. But tax burdens remain a real drag on growth. There is limited scope for radical cuts in the short term, but we should lay plans now to reduce this heavy burden sharply in the medium term.

"Plans to reduce corporation tax rates need to be much more ambitious than they currently are and the rate of employers' national insurance contributions also needs to come down."

Posted by Jacob Williams