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Osborne’s rates are ‘a drag on growth’

BUSTED: Chamber boss Babs Murphy accused Chancellor George Osborne of cynicalpolitics

BUSTED: Chamber boss Babs Murphy accused Chancellor George Osborne of cynicalpolitics

Business chiefs have called on Chancellor George Osbourne to give companies a major break in Thursday’s autumn statement.

Mr Osbourne is being urged to freeze business rates, removing a burden on firms struggling to make their way out of recession.

Business rates increase automatically with inflation every year – and the North and Western Lancashire Chamber of Commerce wants the Chancellor to stop to it.

Chamber Chief executive Babs Murphy said: “There is no question the business rates system is broken. This tax hits companies of all sizes long before they a make profit, and acts as a drag on business growth and investment.

“Firms across the UK have been crying out for relief from these burdensome taxes for years, but so far their pleas have been ignored. It is cynical to freeze council tax while allowing the pain caused by business rates to continue, and goes against pro-business pledges made by the government.

“The Chancellor should use the Autumn Statement to announce a two-year freeze on business rates, along with a root and branch reform of the entire system.”

Norman Tenray, finance spokesman for the chamber, said the business rates system was a massive burden on companies.

Mr Tenray, boss of Longridge-based Obas, pays arounds £3,000 a month in business rates on empty buildings on his industrial estate.

Mr Tenray, who employs 45 people, said Government did not understand how much pressure ever-increasing rates placed on businesses.

He said: “We are constantly economising and cutting every cost. It doesn’t make sense, the Government should encourage us to grow.

“Over 50 per cent of buildings on our site are empty yet someone seems to think unless they cane us we’re not going to go looking for tenants. It’s ridiculous.”

Mr Tenray said he did not think there was a realistic chance of Mr Osbourne addressing the issue this week, but the business community was determine to keep the pressure on.

The chamber estimates the cost to the exchequer of a two-year freeze would be around £1.7bn, equivalent to just 0.1 per cent of total government spending.

Stephen Hunter, head of tax for KPMG in Lancashire and Cumbria, said: “I expect the Autumn Statement to be ‘steady as she goes’. While it is positive news the deficit is down by a third, the Government’s attention must remain on repairing the public finances, which rules out wild tax giveaways.

“Businesses I speak to across Lancashire want to see indications the Government will encourage and foster growth and private sector investment, and not bring in measures which could choke the first signs of a recovery.

“There is burgeoning confidence in the region, which has been encouraged by the recent positive economic indicators.

“Although even optimists have been surprised by how strong 2013 has been, the recovery is not secured and a number of headwinds could still knock it off-course.”

Matthew Hindle, Tax Partner at leading Lancashire accountants and business advisors WNJ, says introducing more specifically targeted anti-avoidance rules is unnecessary and would complicate the system even more.

Matthew was speaking in advance of the annual Autumn Statement, to be given by The Chancellor of the Exchequer, George Osborne, to Parliament on December 5, along with an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.

Matthew said: “With the advent of the General Anti Abuse Rule (GAAR) in the 2013 Budget this year’s Autumn Statement should be a more condensed version than in previous years.

“The GAAR gives the power to block egregious tax schemes. Presumably, if this is the case, there should be no need to introduce more specific rules which have the effect of complicating the tax system and explains why the UK has one of the largest tax codes in the world.”

Matthew Hindle, based at WNJ’s offices at Preston Marina, believes there may be a little good news in the statement regarding personal tax, national insurance and pension allowances because a General Election is on the horizon.

However, he added: “It may be that the coalition takes it upon itself to give a little back, by merely restoring what they have already taken.”

 

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