Sheffield Chamber of Commerce has called on the Government to pause the Corporation Tax roadmap until after Brexit in the forthcoming Budget in a bid to boost business investment.
Ahead of the Budget on November 22, Richard Wright, Sheffield Chamber’s Executive Director, said the move would help ‘ease the burden’ of upfront costs on growing businesses.
Richard Wright said: “The Government has long banged the drum that lowering Corporation Tax is the solution to boosting business investment. The reality is that the burden of upfront costs and taxes that hit firms before they begin to make a profit hinders business growth and investment far more than the level of tax they’re asked to contribute once they’ve made a profit.
“That’s why we’re calling on the Chancellor of the Exchequer to pause the Corporation Tax roadmap until after Brexit, and for the resulting resources to be ring-fenced to help ease the burden of upfront costs and taxes on growing businesses. For example, the UK has the highest business property taxes in the developed world, as calls from across the business community for real reform to the archaic business rates system continue to go unanswered by government.
“If the annual uprating goes ahead, calculated using RPI which hit 3.9% in September, firms will face yet another steep increase in costs. At a time of considerable uncertainty and economic stagnation, these growing bills mean some businesses face a tipping point.
“The system also penalises firms for investing in plant and machinery, and, at this critical juncture, business investment should be encouraged by all means possible.
“In return for changes to the system, businesses will respond by using improved cash flow to create jobs, train employees and modernise their facilities.
“The Chancellor Philip Hammond must take big and bold action to incentivise firms to invest. At the moment, we’re seeing business investment lag, as firms hesitate to take the plunge while so much uncertainty remains. As we move through the EU negotiations and a transition period, the Treasury must encourage and support firms to put money back into their firms through investment, which in turn will raise wages and living standards for us all.
“Business constantly laments the shortcoming of the UK’s infrastructure, which doesn’t deliver the quantity and quality of transport connections, digital infrastructure or housing needed in the right places. There are some signs with HS2 and Transport for the North that Government has acknowledged this but too often infrastructure projects get kicked into the long grass, leaving our existing networks under pressure and at over capacity.
“This investment must not be put back this time – there is a strong case for it to be accelerated, especially in the regions which have been underfunded compared with the South East for years.”