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May 22, 2015

Government must simplify tax, says IoD

Government must simplify tax, says IoDMembers of the Institute of Directors (IoD) say the Government must focus on budget cuts rather than tax rises in order to achieve deficit reduction and they are also calling for significant tax simplification.

A post-election poll of over 2,000 IoD members has found that 85% back the Government's plan to run a budget surplus by the end of the parliament.

However, these business leaders have said they want the Government strategy to be "balanced towards spending cuts, rather than tax rises". Over half the IoD members polled strongly oppose increases in National Insurance, income tax, VAT and business rates.

In addition, 89% of members called for more action on tax avoidance. However, there was a degree of scepticism as to how much money would be raised through the measures, with just 15% confident that the Government would raise the target of £5bn.

Infrastructure and education are also ranked as top priorities for business. The findings show that 56% want the Government to prioritise investment in high-speed internet; 55% also want investment in energy generation; and there is also strong support for spending on railways, roads and airports.

Simon Walker, IoD director general, said: "The election result was more decisive than most expected, and now is the time for the new Government to take decisive action. Returning the budget to surplus must be the overriding goal in this parliament, but businesses want the emphasis to be on finding further reductions in spending, not significantly raising taxes.

"While cuts are always difficult to make, the simple truth is that every year we run a deficit is another year that the stock of debt increases, and interest payments with it. Interest rates on government debt may be low now, but they will not stay low forever. If we do not even begin to deal with the pile of debt, the situation will only be more dangerous if we encounter another economic shock."

Walker has also called for tax simplification. He said: "A hugely complex tax code also remains a barrier to growth for many businesses. We welcome the Conservatives' manifesto pledges to raise the personal allowance and the 40p threshold over this Parliament, but much more fundamental reforms are needed. Businesses want national insurance brought down, business rates reformed and a tax code which encourages investment and entrepreneurialism. This will not be achieved by tinkering at the edges."

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