Our Spring Budget survey has shown that businesses place income tax reduction as their number one priority for the Chancellor’s upcoming Budget.
22% of businesses rank a reduction in income tax as their top priority, closely followed by reductions in inheritance tax (19%) and business rates (18%).
Cuts in income tax were prioritised over cuts to corporation tax, which only 3% of businesses put as their first choice.
Businesses believe that reducing income tax, inheritance tax and business rates will deliver the most tangible benefits for the UK economy.
Reduced income tax should provide a helpful boost to consumer spending, at a time when Brexit concerns may be damaging consumer confidence.
The argument made by some is that high inheritance tax and income tax reduce the incentives for employees and entrepreneurs to work harder and create more wealth, and ultimately more jobs.
74% of businesses believe these tax reductions should be funded by an improvement in public sector productivity, rather than cutting Government services or increasing public sector debt.
60% of businesses in the survey would, however, be willing to see a tax rise if it were specifically to raise funds for the care sector.
Timothy Fussell, Head of Business Tax says: “Businesses are looking for tax changes that will give the UK economy a shot in the arm.
“Reductions in income tax will incentivise workers and support consumer confidence.
“Businesses, meanwhile, don’t want to be penalised for being successful and high earning and believe that the Government should be doing all it can to encourage entrepreneurial activity.
“Businesses also feel that rises in tax taken through Stamp Duty Land Tax, inheritance tax and from the forthcoming changes to business rates have gone too far and need to be reversed.”
Which tax should be reduced in order to improve the long-term performance of the UK economy?
Which tax break can most reasonably be reduced whilst causing the least amount of damage to the long-term performance of the UK economy?
Which type of tax could most reasonably be increased whilst causing the least amount of damage to the long-term performance of the UK economy?