Taxing small firms 'could exacerbate unemployment'
Increasing taxes on small businesses could cause unemployment to rise even further, according to a new report.
The Federation of Small Businesses (FSB) warned that the economy could be plunged further into debt if the tax burden facing small firms grows. It pointed out that small companies are already preparing for increases in National Insurance in April 2011, when employer contributions will rise by 1p. Ultimately, this will cost the government more in additional jobseekers allowance and other benefits than it will generate through the increase, as small firms will be forced to make job cuts, the report states.
The FSB is therefore urging the government not to introduce any further taxes, insisting that cuts in business levies would actually encourage small businesses t take on extra staff. "Taxing small businesses to help reduce the public sector deficit is a dead-end that will instead cost us dearly in jobs and economic growth," said John Walker, national policy chairman at the organisation. Earlier this month, the FSB called for a freeze on new regulation, claiming this could also help to tackle rising unemployment.
