IoD backs Chancellor on plan to run surplus, but calls on him to signal the way towards promised tax cuts
The Institute of Directors has urged George Osborne to “hold his nerve” on deficit reduction in this week’s Autumn Statement. IoD members are clear that the Chancellor must put the public finances on a more stable footing, with 85% supporting the plan to run a budget surplus by the end of the Parliament*.
Simon Walker, Director General of the IoD, said:
“The Chancellor is under immense pressure to loosen the purse strings, but he must hold his nerve. If he is going to fulfil his ambition to build a “low tax, high wage” economy he cannot compromise on his plans to eliminate the deficit and start paying down Britain’s mountain of debt.
“After several difficult years, a stronger economy is allowing companies to deliver higher wages for employees across the country. Long-term economic success depends on low and simple taxes, but business leaders know that tackling the deficit gives Osborne little wiggle-room to reduce the burden of taxation.
“The Chancellor can’t go on a spending spree, but he must use this Autumn Statement to spell out when he will deliver on the tax cuts his party promised in their election manifesto. The Government has said it will increase the personal allowance, raise the 40p threshold and align national insurance with income tax. Setting out how they plan to do this would help to demonstrate the gain, after the pain of spending cuts.”
The IoD, which represents 35,000 business leaders, is calling on the Chancellor to:
- Begin the long overdue process of aligning income tax with national insurance
- Put in place a timeline to reach the promised higher rate tax threshold of £50,000 and the £12,500 tax-free personal allowance
- Launch a consultation on merging inheritance tax and capital gains tax
- Protect, and where possible enhance, tax reliefs for start-ups, small and medium-sized businesses, such as the Annual Investment Allowance, Enterprise and Seed Enterprise Investment Schemes
The IoD accepted that deficit reduction meant cuts to business support schemes in the Department for Business budget, but urged the Government to see the value of assistance for exporters provided by UK Trade and Investment. Walker added:
“UKTI is one of the most effective services the government provides for business, helping thousands tap into trade and investment opportunities worth billions of pounds. With the UK running a substantial trade deficit, exporters will be hoping that the Chancellor prioritises UKTI as an area to use his limited funds. No matter what settlement UKTI gets, like all parts of Government, it will have to concentrate in future on using its budget as efficiently as possible, focussing on generating the best return.”
The Chancellor is also expected to announce on Wednesday how much employers will be charged under the new apprenticeship levy, but Walker warned that:
“The apprenticeship levy must not affect smaller employers, and money raised has to go toward high-quality training schemes, rather than being lost in bureaucratic administration of the scheme.”
*In a survey of 1,211 IoD members conducted after the General Election in May 2015, 85% agreed with the Government’s plan to run a budget surplus by the end of the parliament.