An incoming Government must concentrate its efforts on reducing the budget deficit,
and should scrap the planned increase in national insurance contributions (NICs),
according to the British Chambers of Commerce (BCC).
The latest monthly survey from the business group revealed that 41% of companies
believe reducing the deficit should be the Government’s number one priority, while
many also believe that an increase in NICs represents the most damaging tax rise
that could be imposed on them.
36% of those surveyed felt that a VAT increase would be the least damaging to their
business, compared with just 6.6% who selected NICs as the more favourable option.
Meanwhile, the business group has used the Treasury’s Tax Ready Reckoner to calculate
that increasing VAT by 1% to 18.5% would raise an extra £4.5bn in revenue, compared
with the £5.1bn that would be netted by a rise in NICs. The BCC argues that the difference
between the two sums could be offset by targeted spending cuts.
David Frost, BCC Director General, said, ‘Companies have and will continue to play
their part in creating wealth and jobs, generating economic growth and driving recovery,
but the right environment needs to be in place’.
‘Raising a damaging tax on business, like NICs, will be counter-productive. It will
mean fewer jobs and less tax revenue in the long-term. While businesses fully understand
the need to bring down the UK’s deficit, they are clearly saying that using VAT would
be a less damaging way to achieve this.’

Fathers will gain the right to take six months’ paternity leave under new plans announced by the Government. The proposals will see parents afforded the right to share a year of parental leave to care for their newborn child, with fathers allowed to take six months off after the mother’s first six months of leave. The changes will take effect for parents of children due on or after 3 April 2011. Harriet Harman, Minister for Women and Equality, said the new rights would give ‘families radically more choice and flexibility’ and enable ‘fathers to play a bigger part n bringing up their children.’

The Government has yet to fix a date for its plans to extend mothers’ maternity leave from nine months to a year. Commenting on the shared leave proposals, Miles Templeman, Director General of the Institute of Directors, said: ‘We strongly support new paternity leave rights for fathers, providing the Government ensures that the new system is simple for businesses to administer and there is no overall increase in the total amount of paid and unpaid leave parents can take.’

Meanwhile, David Frost, Director General of the British Chambers of Commerce, said: ‘This is not the time to do it. It is a huge burden to plan for both a male and a
female employee being away.’ However, the Government anticipates that the new rules will have a ‘minimal’ impact on businesses.