Commenting, EEF Chairman, Martin Temple, said:
"Government clearly understands the pressures companies are under and and this is a useful first building block. However, we need to build on this urgently with measures to assist companies with their cashflow, ensure responsible lending together with a delay in the planned increases in taxation and new regulatory measures."
To assist companies with their cashflow EEF has proposed...
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.
ENDS