Tax hikes for small firms 'sends the wrong message'
The government is likely to send out the wrong message if it increases taxes on small businesses, according to the chief executive of the National Federation of Enterprise Agencies (NFEA). George Derbyshire made his comments after the Federation of Small Businesses and the Confederation of British Industry called on ministers not to raise the corporation tax burden on small firms in the pre-budget report.
He suggested that announcing tax hikes at a time when the economy is still in recession may not be the best thing to do.
"Small businesses are going to be the engine that leads the economy out of the recession," Mr Derbyshire stressed. Putting up corporation tax or National Insurance will simply say to these companies that the government does not appreciate their contributions, he added, as well as acting as a disincentive to continue innovating, he added. Research from the Centre for Economics and Business Research has found that raising corporation tax from 21 per cent to 26 per cent would cost around 100,000 jobs in the small business sector.
