Tax ignored in skills-focused pre-Budget report

Many business leaders had hoped for a simplification of tax rules so that British firms could gain an advantage when competing with other European countries.

However, today’s pre-Budget report made no mention of much hoped for changes to corporation tax, which lobby groups, such as the BCC, say is higher than the EU average.

Instead, the Chancellor focused on the skills shortage faced by many businesses and said that the UK could only succeed through innovation.

He said: “Economies like ours have no choice but to out-innovate and out-perform competitors by the excellence of our science and education, the quality of infrastructure and environment, and by our flexibility and our levels of creativity and entrepreneurship.”

Universities will receive £60m for applied research to help Britain ‘transform knowledge into successful products and new jobs’, he said.

David Frost, director general of the British Chambers of Commerce, said: “The Chancellor has laid out, on the face of it, an impressive wish list today, concentrating on key, long term priorities that the UK must deal with if we are to retain our competitive edge.

“Business will want reassurance that this is all affordable and there will not be significant tax rises in the March budget.”

The mini-Budget also announced stricter penalties for employers who fail to pay the minimum wage, with an extra £4.5m pledged to tackle the issue.

However, the report was dismissed as some as ‘a disappointment’.

“Small and medium-sized businesses will be disappointed that there was little or nothing in this pre- Budget report for them,” said Tom McGinness, head of middle market tax at KPMG.

“If the Government wants to stimulate UK plc to compete more vigorously on the worldwide stage, then they will need to introduce more solid and tangible measures to incentivise small and medium-sized companies.”

© Crimson Business Ltd. 2006