Planned reductions to corporation tax should be paused at the next Budget to fund business rates relief, the British Chambers of Commerce said today.
The BCC called for the government’s “business tax road map”, which aims to reduce corporation tax to 17 per cent by 2019, to be paused until after Brexit. Corporation tax currently stands at 19 per cent.
The group called on Philip Hammond to set out plans in his budget at the end of next month to use the additional money to tackle rising up-front costs including business rates, the apprenticeship levy, and insurance premium tax.
Director-general Adam Marshall told City A.M.: “What we’re seeing now is that businesses of all sizes are saying they're comfortable with how much they pay in profit tax, but the burden is up-front taxes.”
He added that while the BCC continues to support a reduction in corporation tax, the “immediate squeeze” on businesses is from up-front costs like business rates.
In addition to pausing the corporation tax reduction plans, the BCC called on the chancellor to abandon the uprating of business rates for the next two years.
"It would be unconscionable for the government to use September’s inflation figures to slam businesses with a huge rise in rates, particularly when they already face spiralling up-front costs,” Marshall commented.
Business rates are set to rise in line with retail price inflation (RPI), which last month hit 3.9 per cent.
Other proposals included temporarily increasing the Annual Investment Allowance to a “Brexit special” rate of £1m, to incentivise investment during the process.
“A Budget that prioritises goodies and giveaways rather than future-proofing the economy would be a dereliction of duty by the government as a whole," concluded Marshall.