The Institute of Directors (IoD) have just published a paper which highlights the burdens of the UK’s tax regime on small firms.
According to the IOD, the combination of the small business rate of corporation tax, national insurance, business rates, fuel and stamp duties and renewable energy levies add up to an effective tax burden of more than 40 per cent for small businesses.
Worst still, the report has estimated that the average small business is working to generate profits for the state from January 1st to May 21st every year i.e. nearly five months of profits are being paid to government and not to reinvest in the business or, worst still, to create growth and employment.
Whilst a programme of reductions in public expenditure will no doubt help to bring done the government debt, we also need to ensure that we have economic growth that is driven by those entrepreneurial businesses that can create employment in the private sector at a time when public sector jobs will be reduced.
However, how is that possible when government takes more and more money from the business sector and provides little, if any, incentive, for it to invest to develop its potential?
One just hopes that George Osbourne will listen to these concerns and act accordingly when his budget is announced later this month.