Tax policies risk doing damage, warns IoD

Business leaders have urged the Government to rethink new tax policies that they believe are likely to seriously damage the UK’s economy.

The results of a survey by the Institute of Directors (IoD) show that more than two thirds (69%) of British bosses believe the legislation introduced in the Budget will have a negative effect on the country’s finances.

The majority of the 1,000 IoD members questioned were critical of all the Chancellor’s high-profile tax changes, and suggested that tax-reducing measures, which could be introduced to Finance Bill 2009 as it enters its final stages, would be more advantageous for UK firms.

The strongest condemnation was reserved for the 0.5% increase in National Insurance rates, with 84% of respondents speaking out against it.

‘An additional tax on jobs cannot make sense at a time when businesses are struggling to survive,’ remarked the IoD.

Other policies that were subject to disapproval included the 50% income tax rate for high-earners, the withdrawal of the benefit of personal allowances at incomes of above £100,000, and the restriction of relief for pension contributions – all of which were seen by three-quarters of directors as potentially hazardous.

This, said the IoD, is ‘despite the fact that the majority of… members run SMEs and do not have six-figure incomes.

‘Such measures send the wrong signals about wealth creation and raise the spectre of high taxes for larger swathes of the population in the future,’ added the institute.

‘It is also clear that the Government’s chosen measures on the personal allowance and on pension contributions will bring great administrative burdens in their wake.’

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