Chamber: Raise VAT, not NICs
CAMBRIDGESHIRE Chambers of Commerce is calling on the Government to reconsider a proposed increase in national insurance contributions because of the risk of inhibiting growth in the region. The one per cent increase in NICs, scheduled for April 2011, sho
CAMBRIDGESHIRE Chambers of Commerce is calling on the Government to reconsider a proposed increase in national insurance contributions because of the risk of inhibiting growth in the region.
The one per cent increase in NICs, scheduled for April 2011, should be replaced by a one per cent increase in VAT, according to chief executive John Bridge.
The call comes following a national survey showing that three-quarters of SMEs believe the worst effects of the recession are not over for their business.
A third of the SMEs surveyed said that a VAT increase would be the least damaging to their business when compared to increases in national insurance contributions, corporation tax, fuel duty and capital gains tax.
More than one in five said they would absorb the cost of the increased NICs by limiting staffing levels, which would have a negative knock-on effect to the labour market.
Mr Bridge said the Government needed to offer incentives to businesses rather than costs.
Most Read
- 1 Pub regulars celebrate life of former landlord who died during pandemic
- 2 Obsessive stalker jailed for posting explicit photographs of his former partner
- 3 Recap: Thameslink passengers urged to delay travel due to 'incidents'
- 4 Rocks thrown at St Neots school building in vandal attack
- 5 Dry weather continues to impact district as pond drys up in Ramsey
- 6 Product sold at Tesco recalled due to risk of disease-causing bacteria
- 7 Number of bird flu cases have been confirmed in Huntingdonshire
- 8 Fun in the sun at Huntingdon Carnival 2022
- 9 Riverside Miniature Railway raises flag in record breaking year
- 10 St Ives ready for pre-season opener with Rushden & Higham
"In particular, the cost of employing people must be reduced if future governments are serious about giving businesses the freedom to create jobs and drive our economic recovery.
"The message from small business here is clear - that an increase in an employer's national insurance contributions would inhibit their ability to generate economic growth. Official figures may say we're out of the recession but for many the reality is very different."
Mr Bridge said the government could raise a similar amount of money by replacing the NIC increase with a VAT increase instead.
"According to the Treasury's 'Tax Ready Reckoner', raising VAT by just one per cent to 18.5 per cent would net the Government an extra �4.5billion in revenue. The one per cent increase in NICs, planned for 2011 would provide a similar sum, raising �5.1bn across the UK," he said.
"With these figures in mind, we would argue that the planned NICs hike should be scrapped, and substituted by a VAT rise coupled with targeted spending cuts.