Tax is an issue that affects all small businesses. What small firms need above all is a simple and stable tax system.
The tax system needs to be:
- clear and specific;
- properly evaluated prior to implementation to avoid unintended consequences;
- easy for employers to comply with and to administer; and
- used to collect taxes, not administer benefits.
The FSB has welcomed the recent debate on taxation, but urges all political parties to put more emphasis on small business taxation in their policy proposals. It must be remembered that a significant minority of small businesses are unincorporated and the tax system must provide a level playing field between incorporated and unincorporated businesses.
FSB Budget Submission
The FSB is calling on the Government to completely freeze National Insurance Contribution (NICs) rises and reverse the planned increase to employers' NICs in 2011, reform the tax system and freeze the planned one per cent rise in corporation tax in 2011.
Centre for Economics and Business Research report
Raising National Insurance for employers by 1p would cost the economy 57,000 jobs but only make a small dent in the gap in public finances, a report by the CEBR shows.
Administrative Burden
The FSB is concerned about the administrative burden the tax system has on small firms and the impact of payroll administration on employers. The FSB firmly believes that the tax system should not be used to administer employee payments. This should be the Government's job and the FSB is very concerned about the Government propensity to hand over an increasing number of these responsibilities to employers.
Another area of concern is the increase in VAT fraud. While we acknowledge that the Government is trying to tackle this issue, we are concerned that the compliance burden will hit small businesses disproportionately.