Government Tax Increase on Small Companies Will Extend Recession


Last week’s announcement that the United States had emerged from the recession, has put increasing pressure on the UK Government to follow suit ,by announcing the end of economic contraction. According to a report by the Centre for Economics and Business Research, Alistair Darling is being strongly discouraged from raising taxation on small business, in the hope that it will help the UK’s economic recovery ,

The report concluded, that if the rate of corporation tax was raised even by as little as 5%, the results would have disastrous and far-reaching consequences for the UK’s future economic stability.

Indeed the research found that, implementing a policy of increased SME taxation, would result in a greater number of small businesses going into administration, almost 100,000 job losses and a £4.3 billion reduction in the overall economic output of the small business and company formation sector.

Economist Robert Hall, comments: “ As the report concludes, increasing taxation on the SME sector is a short sighted strategy; not only will it compound an already hostile job market, it will also stunt the UK’s future economic growth as entrepreneurs considering company formation will be dissuaded and established companies will not be able to invest in their companies future growth. All in all, the Chancellor should be passionately urged not to increase small business taxation in his pre-budget report.”