Alex Veitch
Director of Policy & Public Affairs, British Chambers of Commerce
Despite increasing business concerns regarding taxation, we believe in the potential of our tax system as a force for growth for SMEs.
While energy and inflation remain top business concerns, the British Chambers of Commerce (BCC) is seeing the issue of taxation emerge as a growing anxiety for many firms.
Tax system concerns
According to our latest Quarterly Economic Survey, almost two-fifths of businesses (38%) are citing taxation as a concern. When we look at our Business Outlook Survey (carried out in January and February), we see a similar trend, with regulation and taxation problems regularly troubling a third of firms (30%).
However, we believe that the taxation system can be reimagined as a force that enables growth. While there are many ways it can be redesigned to support SMEs, there are two key areas where the Government should focus: the labour market and business rates.
With over 1.1 million unfilled jobs, our
tight labour market is one of the most
significant barriers to business growth.
Unlocking our labour market
With over 1.1 million unfilled jobs, our tight labour market is one of the most significant barriers to business growth. The availability of affordable childcare remains a key contributor to the size of our inactive workforce, with 1.7 million people unemployed due to caring responsibilities. To unlock this pool of talent, childcare must be made more affordable.
We are asking the Government to immediately increase the support available to parents through Tax-Free Childcare accounts. Longer-term, it should also consider more radical options, such as reforming the tax system to allow parents to claim tax relief for childcare against a proportion of their joint income. For self-employed parents, a portion of childcare could also be claimed as a business expense.
Business rates for growth
Business rates currently take no account of a firm’s turnover or profits. We believe they should be made more flexible to encourage growth. In the longer term, the Treasury should consider a rates system that reflects the lifecycle stage of business (eg. ‘startup rate’ for new firms). The Government should also implement an annual revaluation scheme — to better reflect the true value of a business.
Despite the issue of taxation emerging as a growing concern for many businesses, we believe that with the right vision, the tax system can become a force that enables growth for our local businesses and the national economy.