Tax regime failing to support growth say Midland firms
MIDLAND businesses believe the UK tax regime fails to support enterprise and innovation – despite the Government supposedly introducing policies to stimulate growth, new data suggests.
Advisor PwC said its fourth Enterprising UK survey had found as many as three-quarters (73%) of firms felt tax policies were unsupportive.
More than half (53%) of companies in the region said recent SME-targeted measures such as increased tax relief for research and development would have no impact. The same will be the case for grant funding for apprenticeships, the extension of the small business rate relief holiday, and reforms to the Enterprise Investment and Venture Capital Trusts schemes.
The study concludes if private businesses in the region are indifferent to measures aimed to help them, the same cannot be said for broader tax changes. The least popular has been the increased rate of national insurance contributions, with 92% of Midlands firms surveyed saying this has had a negative impact on their business.
Likewise three quarters (75%) of them believe the 20% VAT rate has had an adverse effect, while 79% feel the continuation of the 50% rate of income tax is proving detrimental. Overall 62% of businesses say the more onerous tax regime is an obstacle to growth.
Chris Romans, partner and private business expert at PwC in the Midlands, commented: “Private businesses in the region hold the key to future economic growth, many having weathered the recession better than their listed counterparts.
“The Government says it recognises this but certain measures designed to support business endeavour are not having the intended effect. Incentives and initiatives are all well and good if they’re easy to access, but the businesses we speak to want changes that make their everyday lives easier.
“Cutting red tape is important here: 41% of private businesses in the Midlands say their administrative burden needs to be reduced. Plans to simplify the tax regime should also help and we hope to hear more on this in the Chancellor’s Autumn Statement.”
The growth potential of private businesses is reflected in the optimism of survey participants in the Midlands. Some 88% expect the business environment to improve over the next five years, a higher percentage than in any other region of the UK, except for the South East, and significantly higher than two years ago (66%).
Almost as many (84%) expect their revenues to grow over the next 12 months and 69% expect their pre-tax profits to increase.
The top three strategies for growth, according to survey respondents in the Midlands, will be increasing market share (41%), developing new products or services (31%), and expanding into new geographic markets – with the BRIC economies of particular interest (16%).
