Increasing smaller business taxes would send out 'wrong message'

Date: 2nd November 2009

Small businesses will play an important part in helping the UK out of recession and any move to increase their taxes would not be supportive, a business expert has claimed.

According to the National Federation of Enterprise Agencies (NFEA), finances within the public sector will be squeezed and many large corporations will pull in their horns.

However, innovation and dynamism is to be found within the small business sector, the organisation explained.

George Derbyshire, chief executive of NFEA, said: "Just to bang on an extra amount of corporation tax or changes in National Insurance or whatever may be on the agenda, is just sending out the wrong message - the message that we don't appreciate your contribution, we don't value you and we're not really going to incentivise you to carry on doing what you do so well."

He added that a "creative approach" towards small business taxation will be more beneficial for the economy in the long term.

A previous study from the Centre for Economics and Business Research showed that if the government were to raise corporation tax from 21 to 26 per cent, more than 100,000 jobs would be lost within the small business sector.