UK tax system holds us back, top firms warn
Nearly half of UK businesses have said the nation’s tax regime is ‘unfavourable’ and puts Britain behind China and other rivals.
Manufacturers are seeking major business reform in next month’s autumn budget – bringing the economy ‘out of its current torpor’.
The call comes as a survey published by Make UK, a manufacturing group, and RSM, a consulting firm, revealed flailing confidence in the system.
Almost half of companies (44 per cent) surveyed believe the UK has an unfavourable business tax and regulatory environment, with 28 per cent viewing it as less favourable than China.
Many believe it is worse than the United States (27 per cent), Germany (26 per cent), France (23 per cent) and Italy (21 per cent).
‘Unfavourable’: Manufacturers are seeking major business reform in next month’s autumn budget
Firms have called for a simplification of incentives, tax and regulations. These include promoting a competitive corporation tax system and tax credits for R&D in Britain.
Analysis by tax expert Dan Neidle recently revealed that companies were paying a greater proportion of their profits to the exchequer than in the 1970s.
Chancellor Jeremy Hunt said last week he would choose cutting taxes for businesses before any other area, but cautioned ‘at the moment, we are not in a position to have that discussion’.
Fhaheen Khan, senior economist at Make UK, said: ‘Manufacturers are clear that many aspects of the current tax and regulatory system are not fit for purpose and are failing to promote vital investment.
‘We cannot continue with the current flip-flopping and policy inconsistency if we are to shake the economy out of its current torpor and promote long-term growth. Government must start by conducting an urgent MOT of the current unfavourable regime to make it work for business.’
Mike Thornton, RSM’s head of manufacturing, said: ‘The correlation between tax and regulation and economic growth is clear. Yet UK manufacturers find the framework a burden – putting UK industry at a disadvantage.’
The comments come as a separate report from the advisory group BDO also warns that business confidence, output and hiring intentions continued to fall in September.
Kaley Crossthwaite, a partner at BDO, said: ‘With the threat of recession, businesses are understandably feeling the pressure.
‘More needs to be done to offer businesses support.’
