Taxation remains main threat to recovery
SMALL and medium-sized businesses in the North West are optimistic about the year ahead with more than half predicting an increase in sales.
But the optimism is tempered by serious concerns over a perceived high level of business taxation according to this year’s Baker Tilly Owner-Managed Business (OMB) survey.
It shows that reducing the cost and complexity of taxation, including corporation tax, national insurance contributions and VAT, has been identified as the main priority for the next government as it looks to help businesses survive and grow post-recession.
While last year’s OMB survey showed that only 19% of businesses in the region predicted sales would increase, this year’s survey reveals this figure has increased to 54% – a clear indicator of consensus that the worst of the recession is definitely over.
The survey of 200 board directors of companies across all industry sectors with turnover of up to £50m reveals that 95% see the tax burden as a threat to growth.
Furthermore, 74% see tax complexity as a threat to growth but 45% are anticipating an increase in operating profits.
Mark Blakemore, office managing partner at the Manchester office of Baker Tilly, said: “The incoming government will have to balance the sibling rivals of tax and spend – an area which our research shows businesses to be clearly concerned about.
“The new government needs to be aware of the extra sensitivity surrounding the taxation of small and medium-sized companies as they gear up to help pull the country out of recession.
“Despite the precarious state of the public finances, each party’s manifesto commitments on tax play down the prospect of tax increases.
“Experience suggests that businesses are right to be concerned as the post-election policies rarely match the pre-election rhetoric.”
New figures produced by the CBI also show that demand for goods made by SME manufacturers is improving at home and abroad and production has stabilised.
But the business group is also warning that cost pressures have intensified and access to credit remains a headache for some smaller firms.
Of the 402 manufacturing firms surveyed for the CBI’s quarterly SME Trends Survey, 36% reported a rise in the volume of total orders in the three months to April, and 26% a fall.
