Specific measures EEF is looking for:
1. Small company rate of corporation tax
The phased increase in the small company rate of corporation tax represents a £500m tax rise this year, rising to £1bn next year. The increase in April 2008 should be reversed and the small company’s rate frozen at 20% until 2010, at the earliest.
2. Temporary support for investment
In order to provide greater, temporary support for investment during the economic downturn, the Annual Investment Allowance should be raised from £50,000 to £250,000 for a period of 18 months. In addition, 50% first year capital allowances for small businesses would help prevent a retrenchment in business investment. The upfront cost to the Exchequer would be offset by increased tax revenues further out.
3. Indirect taxes
Increases in the landfill tax, aggregates levy and climate change levy should be postponed and rates maintained at their current level to minimise the cost burden on business.
4. Minimising the regulatory burden
In order to keep the regulatory burden to a minimum the introduction of new employment and environmental regulations currently in the pipeline should be delayed. In particular, the implementation of the right to request flexible working, which many companies are currently finding problematic, should be postponed. In the current economic climate, companies need to be able to maximise the flexibility of their operations and an extension to flexibility working request will place barriers to this.
5. Tax policy and climate change
In addition to postponing the automatic annual increase in the climate change levy, the Chancellor should use this Pre-Budget statement to give business clarity about the role of tax policy in meeting the government’s environmental obligations. Defra’s Climate Change Simplification Project, seemingly stalled since December 2007, needs to be re-energised. EEF recommends that the interim proposals identified to lower the regulatory burden of climate change policy instruments should be expedited. In addition, the scope of the project needs to be widened to include fiscal policy. Specifically, the overlap between the CCL, the EU ETS and the forthcoming Carbon Reduction Commitment needs to be addressed.
Notes to editor
For more information contact Jenny Russell 0191 4165656 or 07827891808 jrussell@eef.org.uk
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