The director-general of the Confederation of British Industry (CBI) has issued a warning to the government about raising business tax too far, saying that to do so would be at the possible expense of further investment and growth.
In a speech given on September 13th at the Alliance Manchester Business School, Tony Danker argued that the government is going to have to make some big choices if the UK is to unleash business investment and write a new story of growth in order to remain globally competitive.
His comments came after it was revealed that National Insurance Contributions are set to rise in order to support social care and he argued that, instead, business taxation should be flipped on its head and reward companies that invest, which is essential to support a high-growth and sustainable recovery from the pandemic.
Mr Danker went on to say: “After the pandemic, we in business believe that we should pay our fair share to tackle the debts of Covid. That is why many business leaders accepted the jaw-dropping six-point corporate tax increase announced in March. But there is a real risk now that the government will keep turning to business taxes to carry the load.
“Choosing national insurance for social care funding is the latest example. And I am deeply worried the government thinks that taxing business – perhaps more politically palatable – is without consequence to growth. It’s not. Raising business taxes too far has always been self-defeating as it stymies further investment.”
From April 2022, employees, employers and the self-employed will be required to pay £1.25 more in the pound for National Insurance. From April 2023, National Insurance will then return to its current state, with the additional text then collected as a new health and social care levy, which will also be paid by state pensioners who are still working.
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