Whatever tax changes the Chancellor is proposing she must not stifle those who are prepared to take a risk, says KEITH ANDERSON
As 30 October looms on the horizon, has there ever been as much apprehension over a budget? With the general election resulting in a new government of a different political colour, with a substantial majority, there was the promise of certainty, and whether you agree with the policies or not, at least, we all thought, we would know where we stand.
Business always wants certainty and yet that is the very thing that is still missing as speculation over what the Chancellor of the Exchequer may have up her sleeve has now reached fever pitch.
There is no getting away from the fact that there are significant challenges, and hers is not an easy task. There are bound to be winners and losers, whatever decisions are taken on tax and spending, and as ever there is a fine balancing act to be achieved.
Amidst all this conjecture, there remains the constant that business growth must be encouraged and not stifled, and that entrepreneurialism is allowed to flourish. It is for that reason that some of the tax increases which the Chancellor is being urged to consider have caused concern amongst business owners.
There is perhaps a misapprehension that all businesses are profitable and all business owners rich. Very often, what might appear marginal increases to costs – for example an increase in employer national insurance contributions – may be enough to curb a business owner’s appetite for growth.
Some are bending the ear of the Chancellor to increase capital gains tax, and it has been suggested that those who make money from holding shares should pay the same tax as those who work for a living.
The strange notion that someone who owns shares does not also work for a living overlooks the fact that small and medium sized businesses are the backbone of the economy, the owners of which have taken risks to establish their businesses, sometimes accumulating debt which they have had to guarantee personally, and often paying themselves much less than they might have expected to earn as an employee.
That they have created jobs for others, and contributed to the economy generally, should be recognised and supported and not discouraged. Where would we be without such entrepreneurs and risk takers?
The businesses we work with are motivated to provide the very best service to their customers and clients, and to do the right things for their staff. They are crying out for support with the costs of doing business, wrestling with the challenges of skills shortages and craving an economic landscape which encourages investment.
We see the sacrifices that business owners make, the long hours they work and there must be a concerted effort, starting in our schools, to foster an understanding of how the economy works and the vital role of those who set up businesses. Because without a healthy, thriving and dynamic private sector, we will struggle to raise the taxes needed to fund the public services which citizens expect.
The latest assessment from the International Monetary Fund of the UK economy (revising its forecast of growth this year upwards to 1.1%, from 0.7%) offers some hope and perhaps gives the Chancellor more room to operate in. With inflation falling and the promise of interest rate cuts sooner than had been expected earlier this year, there is a chink of light amidst the gloom.
It was Groucho Marx who said, “politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies”, but hopefully, not this time.
Keith Anderson is founder and CEO of Vialex
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