Reaction: Businesses demand a say on where their tax is spent
British business demanded to be allowed to vote on any infrastructure plans that councils put forward to be funded by a new supplementary business rate.
The CBI said the levy outlined yesterday could have been worse – with businesses set to be given a vote where their funds contribute to more than a third of the cost of any project under current plans.
But it said that if the firms are to be charged extra tax they should be allowed a vote on all plans.
CBI deputy director general John Cridland said: "The Government has recognised that business is not prepared to give local government carte blanche to tax firms rather than voters. But giving business a vote must be a non-negotiable part of the package on all major projects."
The Director General of British Chambers of Commerce David Frost went further, describing the plans for the supplementary rate as "unacceptable" and calling the Chancellor's announcement "a disappointment for British businesses that are crying out for investment in the country's struggling transport infrastructure".
He added: "The £14.5bn of new investment announced is a smokescreen, covering only a series of already announced projects. We would have hoped for a greater injection of funds to cover the wider improvements that are so desperately needed. This is simply not good enough, and much more will be needed if the UK is to keep pace with global competitiveness.
"The White Paper on Supplementary Business Rates (SBR) published alongside today's statements indicates the Government wants to tax businesses further to bridge the gap in transport spending. It is unacceptable that businesses should be subjected to an SBR for this purpose."
The British Retail Consortium, which fears its members will face the biggest hit from the extra charge, was also furious about the plans saying they were open to "widespread abuse" by councils and would lead to retailers stumping up for projects without necessarily seeing any benefit.
Head of tax policy Edward Cooke said: "Today's announcement is potentially disastrous. Retailers already contribute more than £4.5bn to the public purse each year through business rates alone. It is unreasonable to demand they pay even more to fund projects which should be paid for from existing revenue, particularly as there is no guarantee that they'll receive any benefits in return.
"We are also extremely concerned that businesses will have no control over which projects their extra taxes will fund. This could become a classic case of taxation without representation."
The BRC said that if every council made use of the charge retailers would face an extra tax bill of £100m.
Ministers have already formulated plans to impose an extra charge on business to pay for the long awaited £16bn-plus Crossrail project in London and business leaders are becoming increasingly restive at what they see as Government's willingness to use them as a politically expedient source of funds.
The CBI said the Chancellor's announcements contained "a mixed bag for business". Mr Cridland said: "The CBI was hoping for a statement for enterprise with encouragement for small businesses, which were hit by tax increases in the last Budget. There was no such statement and many small businesses will be hit again by the increase in the capital gains tax rate.
"The priority given to transport investment for the long term is very welcome. Together with the decision to build Crossrail, this is a move in the right direction." However, on tax simplification he said business wanted "action rather than words" and described the plans to increase "green taxes" on airlines and to tax planes rather than passengers as "a significant tax increase".
"We will need to study how effective this is as a green tax."
A typically combative Ryanair was less measured, describing the plan as: "Just another tax on ordinary passengers from Government ministers swanning around on private aircraft."