Group says budget a 'kick in the teeth' to small firms

Budget 2007

Chancellor of the Exchequer Gordon Brown leaves 11 Downing Street with his traditional red briefcase, ahead of presenting his budget in Parliament in London, Wednesday March 21, 2007.

Budget coverage in full

Key points from the Budget

The speech in full

Thursday, March 22, 2007

By Nigel Tilson

Northern Ireland's largest business organisation slammed the Chancellor's move to hike corporation tax for small business while cutting it for larger firms.

The Federation of Small Businesses, which has 6,000 members in the province, said Mr Brown was wrong to target small firms.

FSB NI policy chairman Wilfred Mitchell said: "This is the Chancellor's 11th budget and this year's offering is no different to the others - he gives with one hand and takes with the other.

"However, this year, after offering plenty of little treats for our members, he throws it all away with a tax hike aimed at small businesses.

"Small businesses in Northern Ireland make up 98% of all businesses, and they do not deserve a kick in the teeth like that."

He said a cut in income tax was welcome but did not offset the " victimisation" of small firms.

"We had hoped that the Chancellor would have been even more generous with corporation tax, particularly given that Northern Ireland is struggling to attract foreign direct investment in competition with the Republic of Ireland, which has a much lower rate."

The FSB welcomed initiatives to get universities and businesses working together on innovation.

But Mr Mitchell pointed out: "We have had 10 years of investment in the school system and our members are still reporting a drastic shortage of basic literacy and numeracy skills. It is obvious to all employers that more reform is needed in our schools.

"Allowances for small businesses to train their employees in basic skills are also welcome to tackle the problem in the workplace."

He said the most common call from its members was for tax simplification.

"While assisting research and development is a good idea, a complicated tax credit system is not the way forward.

"Reducing tax red tape and tax levels would allow small firms to invest and innovate more. They already produce over 60% of all private sector inventions in the UK. The Chancellor has missed an opportunity here."