Business chiefs are ramping up efforts to sway Chancellor Rachel Reeves ahead of this year’s Budget as fears are mounting that fresh tax hikes could squeeze profits at firms up and down the UK.
A series of letters written by heads of trade bodies have landed on the Chancellor’s desk over the last week, with a commitment not to raise taxes on businesses at the top of the list of demands.
Those to have sent in letters with policy proposals over the last week include the British Chambers of Commerce, the Federation of Small Businesses, the Institute of Directors and TheCityUK.
Other organisations sent in their formal list of proposals as early as August.
Discussions between representatives from the private sector and the Treasury are expected to continue in the run-in to the Budget, with policy impacts on growth set to be tested in modelling by the independent fiscal watchdog, the Office for Budget Responsibility (OBR).
Adopting industry-led suggestions could help Reeves regain trust among investors and chief executives after last year’s £20bn tax hikes on employers stunned business chiefs with higher costs and led to a downturn in hiring across the country.
It came despite Reeves’ pledge that Labour would be the “most pro-business government this country has ever seen”.
The Institute of Directors, which has recorded historic lows in business confidence over recent months, has led calls for the government to increase the fiscal buffer and look to “include income tax in the tax mix” in order to raise more revenue without directly hitting businesses.
Most business groups have called on the government to avoid taxing businesses and moving ahead with reforms to business rates, which are set to be changed to a ‘slice-based’ system where tax rates are set to change according to different thresholds.
Its Budget submission also included a last-ditch effort for the government to make reforms to the Employment Rights Bill, which is expected to receive Royal Assent by the end of the year.
One business chief believes the government could soften regulation in the Employment Rights Bill through secondary legislation but others have told City AM that the impacts on hiring would not be undone once the bill has passed through parliament.
Business tax fears rise
There are also growing calls for the government to move ahead with reforms to the Growth and Skills Levy, a manifesto pledge which would seek to fund training across the private sector beyond apprenticeships.
Some industry officials reacted disapprovingly to a Labour-affiliated think tank report earlier this year calling for the levy to be raised and targeted at larger employers, however.
Representatives at TheCityUK have also called on the government to plough ahead with efforts to cut red tape given pledges to ease the regulatory burden on the private sector by 25 per cent in the next few years.
The CityUK has been joined by The Institute of Chartered Accountants in England and Wales in believing the Budget could outline reforms to the tax system, including simplification of the VAT system.
But fears among businesses are mounting, with the ICAEW presenting its survey on how tax would lead to a hiring freeze at over half of UK companies in its letter.
