he Government should raise taxes to assist in the economy’s recovery, but not until 2024, according to a poll of business leaders by accountancy and advisory firm BDO LLP.
While many traditional businesses have struggled as a result of the pandemic, one area that flourished is online business. The majority of respondents (82%) believe that digital taxes should expand to cover a wider range of online sales rather than just large multinationals.
It has already been announced that corporation tax will rise in 2023 and while business tax increases are unlikely to come into force with this budget, the Government are undoubtedly likely to raise funds in other ways. 42% of respondents feel that a priority for the tax authority should be checking errors in COVID-19 pay-outs and tackling so-called ‘furlough fraud’.
In addition, as various forms of pandemic support are phased out, from furlough to Business Rates relief, job creation and skills shortages must stay high on the agenda. In particular, one quarter (25%) of those surveyed voiced a desire for the Kickstart Scheme to be expanded, in order to boost youth employment. Meanwhile, 45% would base Business Rates on rents actually charged or a percentage of profits or turnover, to make them fairer.
Similarly, when asked what the most effective tax break schemes the Chancellor could introduce to support business and boost the economy after the pandemic, 37% suggested replacing the Apprenticeship Levy with a simpler scheme integrated with employment grants.
Concurrently, taking advantage of the post-Brexit freedoms to increase business innovation in the UK, 50% proposed supporting CO2 reduction by giving tax reliefs where companies innovate and invest to meet environment standards. Tighter regulations for energy and materials consumption from 2025 was rated by the majority (60%) as the best way for the Government to achieve carbon reduction goals.
Commenting on the survey’s findings, tax partner at BDO in the North West, said: “Business leaders accept that tax rises are inevitable to support the economy, however, not everyone feels they should be implemented now. There is a view amongst survey respondents that funds should be collected from business areas that have ridden the waves of Covid-19, such as online sales, compared with traditional high street businesses which have been hardest hit.
“The focus now is getting the economy back up to full strength and although the summer saw rapid recovery, its vital that this is sustained if growth forecasts are to remain on track. Boosting employment rates, especially following the furlough scheme ending, needs to be a priority for the Government.
“Tighter regulation is viewed as the most impactful way for the Government to achieve the UK’s carbon neutral goals. And for those business who are innovating and investing in ways to meet environmental standards, respondents are calling for tax relief schemes to be introduced to incentivise this further.”