Tax and regulation harming UK competitiveness

2006

Almost six out of 10 UK companies think the tax system is having a negative impact on the country's international competitiveness and two-thirds complain that tax has become more complicated over the last five years.

A survey of company bosses by the Institute of Directors (IoD) also found that benefits in kind; employees' business expenses; national insurance; statutory sick pay and statutory maternity pay; and procedures for employees joining and leaving were seen as most in need of simplification.

Worse still, as a separate report by the Forum of Private Business (FPB) highlights, is the effect of this deluge of regulatory on job creation.

According to the FSB, red tape prevents around 18 per cent of micro, small and medium-sized businesses from expanding and is responsible for more than 20 per cent making the decision not to employ more staff.

The figures also suggest that small business owners are spending four hours a week on health and safety compliance, while time on VAT and income tax accounts for over five hours per week.

A quarter of small businesses said they were not confident dealing with regulations and more than seven out of 10 complained that government information on red tape is ineffective.

The FSB said that the figures underlined the fact that n legislation introduced in 2001 to reduce the burden of regulation was not working.

Nick Goulding, FPB Chief Executive, said: "The 2001 Act has not achieved its original goals; the Government has only passed 27 deregulatory orders since the its introduction.

"The Government must not lose sight of the objective of the Regulatory Reform Bill," he added.

"Smaller businesses are crippled by overly zealous amounts of red tape and this Bill, if well thought out, can help to produce a competitive economy in which small businesses can grow and prosper."

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