In the 2012 Autumn Statement, the Chancellor George Osborne outlined measures designed to make the savings needed to protect the economy and invest in programmes for growth. The Office for Budget Responsibility said it expects the UK economy to shrink by 0.1 per cent this year, downgrading its March forecast of 0.8 per cent growth.
Recently I was asked to comment on what I would like to see in the Autumn Statement as part of Sage’s business experts panel.
I was looking for five things from the chancellor, of which we received three.
Here are my five wants and why.
- Scrap the planned 3p per litre fuel duty rise, instead of postponing it as the chancellor did in last year’s autumn statement, small businesses and the low paid bear the brunt of this type of rise unfairly.
- Look to reduce corporation tax levels further to encourage external investment to come into the UK, thereby increasing tax revenue for HMRC through employment taxes, VAT and Corporation Tax. It would also allow small firms to retain more of their profit for future investment or simply release more funds to the owners/shareholders to spend thereby adding money into the wider economy (e.g. get people spending money).
With a more competitive CT rate compared to our European neighbours we may be able to attract companies like Amazon, Microsoft & Google to base in the UK and pay taxes here instead of elsewhere e.g. Amazon paying taxes in Holland on UK sales.
A lower percentage with a higher volume would raise the governments tax revenue.
- Merge PAYE and NIC into one PAYE at 30%, no-one believes any more that NIC is not a tax on the employed and simplify the red tape burden on small businesses.
- Scrap employers NIC and introduce an employment tax at 10% for small companies and 12% for larger companies, tied into the personal allowance rates (e.g. threshold at which the tax rates becomes applicable).
- Increase the personal allowance to £10K pa, reducing the tax burden on the low paid, again more money in their pocket to spend, should also reduce benefit dependency.
One of the best ways to reduce our national benefits bill, is not to reduce all individual benefits, but to create an environment where the current levels of benefit are not required as those in work are able to keep more of what they earn.
This also allows for reduced bureaucracy e.g. instead of taxing and then repaying tax back through tax credits, lower the initial tax and reduce the need for tax credits.
The last three measures could help reduce the cost of employment for smaller companies who would therefore be in a better position to create jobs, thereby reducing unemployment and by extension reducing unemployment benefits being paid out.
So we got points 1 & 2 and most of the way to point 5, let’s hope that points 3 & 4 are in the March 2013 budget!
You can access the full report on the 2012 Autumn Statement on our main website.