IoD claims tax burden hurts business growth
THE Institute of Directors, claims the total tax burden on businesses is stifling, not boosting growth.
In a report – ‘ Tax – the Weighty Burden’ – the organisation looks at all forms of tax – not just corporation tax, and its implications on business growth.
The IoD says that when National Insurance, business rates, road fuel duty on haulage and business motoring – are taken in to account, even the smallest businesses pay more than 30% of their profits in tax, while medium-sized businesses pay more than 40%.
It claims the burden increases as a company grows.
A firm with five employees would pay typically 117 days worth of profit in tax in 2012, but if it grew to 20 staff this figure rises to 140 days. If company grew to 100 employees the figure would rise again to 152 days.
Tony Attard, chair of the IoD North West, said: “It may be easy to think that bigger businesses have broader shoulders, but it’s important to remember that they only got to that size because someone took a chance on their idea.
“It is always risky to start, or to expand, a business. Entrepreneurs and investors will not put their money on the line if the return after tax is too small.
“As a company grows and expands the government adds further burdens on cash flow asking that companies when reaching a certain size or adding subsidiaries pay corporation tax quarterly in advance. This is a massive disadvantage to growing companies and entrepreneurs taking on more risk.”
