By Daniel Hunter
The Confederation of British Industry (CBI) today (Wednesday) called on the Chancellor to use his March Budget to score the growth and investment policy goals he put forward in his Autumn Statement and give the UK economy and jobs a real boost.
In its submission to the 2012 Budget, the CBI also urged changes to the UK tax system which it believes could help persuade businesses to invest in the UK and further stimulate growth.
The UK’s leading business group is urging the Government to deliver on its proposals in the Autumn Statement to attract more investment into UK infrastructure, boost investment for mid-sized businesses, and get more credit flowing to companies across the economy.
The CBI’s latest tax proposals include: a new capital allowance to attract investment into types of infrastructure which do not currently qualify; new forms of finance to help companies grow and take on staff; and ways to ensure environmental taxes help to encourage new growth.
“The Chancellor must use this Budget to score the growth and investment policygoals he put forward in his Autumn Statement," John Cridland, CBI Director-General, said.
“Delivering private sector investment in infrastructure, supporting mid-sized businesses, hammering out the details on credit easing, extending the Youth Contract to 16 and 17-year-olds, and introducing the New Build Indemnity Scheme for mortgages at the earliest opportunity will all provide a real boost for UK growth and jobs. With our economy firmly under the international spotlight, there is no time to lose: Plan A plus must become a reality.
“We also want to maximise the incentive for businesses to invest in Britain. So we’re calling on the Government to make some targeted changes to the UK tax system, which could make an impact on business decisions and create new opportunities for growth.
“While the state of the public finances is tight, the Chancellor still has an opportunity in this Budget to make sure the UK tax system is as internationally competitive as it can be.”
The CBI is calling on the Chancellor to —
Implement policies proposed in the Autumn Statement to support growth, including:
- Stimulating infrastructure investment, through new models of private finance, including investment by pension funds. This will require pooled investment platforms, infrastructure being a mainstream asset class, and effective baton passing between the construction phase and long-term financing
- Providing non-bank finance to mid-sized businesses through a corporate bond market, incentivising corporate venturing, and through the Business Finance Partnership
- Delivering on its proposals for credit easing, which means getting the details right on a bank guarantee scheme
- The Youth Contract, which needs to be extended to 16 and 17-year-olds
- The New-Build Indemnity Scheme, which will help make mortgages more affordable, and unfreeze the housing market.
Boost growth through reforms of the UK’s tax system:
- Ensuring changes to the UK’s Controlled Foreign Companies regime result in a simpler way of taxing foreign profits, and a less complicated “Gateway” than is currently in the Government’s draft legislation
- Introducing a new capital allowance to attract investment into types of infrastructure which do not currently qualify, this would apply only to future spending to minimise cost to the Exchequer and ensure the proposal incentivises new private investment in infrastructure
- Improving the flow of credit to companies, especially those with high growth potential, by expanding the Enterprise Investment Scheme; reducing the cost of raising equity for small and medium-sized businesses; and improving incentives for entrepreneurs’ relief, as soon as the public finances allow.
Ensure environmentally-related taxes do not undermine growth and investment, by:
- Replacing the Carbon Reduction Commitment (CRC) with a new Climate Change Levy (CCL), cutting confusion and complexity for businesses while protecting the Treasury’s revenue stream, by expanding the CCL, introducing Mandatory Carbon Reporting (MCR), and abolishing the discredited CRC
- Getting the increase in Air Passenger Duty right, to balance the amount of tax raised by the Treasury with the value of aviation to the economy, and pegging this year’s rise to inflation at 5%, rather than the full 8% as planned.
“Companies that lack certainty on how they will be taxed in the future are reluctant to invest, so Government must deliver on its corporation tax roadmap without delay," Ian McCafferty, CBI Chief Economic Adviser, said.
“We must make sure that we continue to attract and keep successful multi-national businesses in the UK.
“We should ensure our tax system encourages rather than stifles private sector investment through better use of capital allowances. We also need to encourage innovation through our tax system, and design environmental taxes which promote sustainable, value-added growth.
“Our new proposals are designed to help Government realise its ambition for the UK to have the most competitive tax regime in the G20.”
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