How UK taxes are stopping small business owners from expanding
The news that the UK is in a recession is certainly not “new” news. However, adding to the plight of the small and medium enterprises (SMEs), are the existing UK taxes that make expansion and new hiring almost impossible.Analysts say that for growth to be achieved, public policy must change.
Are Taxes Having Negative Effect on Most SMEs?
A national survey conducted by the Federation of Small Businesses (FSB) in February 2010, shows that 58% of SME business owners and managers say taxes have a negative impact on their businesses. That is with an increased in employment figures showing for January. Other statistics are just as sobering. One out of every five persons under twenty-five is unemployed and SME employs more than 59.4% of the private sector workforce. These figures signify that SMEs require an improved fiscal environment in which they can hire.
FSB Says New Taxes Over-Burden SMEs
The FSB has proffered many solutions. One is a petition they are circulating to SEM’s asking that the government scrap its plans to institute a 1% tax increase on employers for National Insurance, and to halt any increases indefinitely. They fear that the tax increase will cause even higher unemployment figures than currently exist. The FSB also points out that SMEs want to increase the number of their employees, and that the government should be assisting them instead of over-burdening them. Given the percentage of employment SMEs provide for the country, they argue that governmental assistance can only help improve employment numbers.
Conclusion: SMEs are Key to Economic Recovery
John Wright, National Chairman of the FSB, urges the government to reduce the amount of National Insurance taxes already paid by SMEs, stating, “Small firms can help to strengthen economic recovery if they are given a chance to grow and flourish.”
There is a flurry of other ideas that political figures are advancing to assist SMEs. They include allowing small businesses to choose to be taxed on cash flow; paid internships for those on “Jobseekers’ Allowance; overhauling competition laws; and cutting business rates for small businesses.
How this evolves in the UK will be closely watched by small and medium enterprise owners and managers. The world at large will be watching as well, as they struggle to find ideas that will also assist the backbone of their nation – the inventive and vital entrepreneur.
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