It is that time of year again and in regard to the forthcoming budget, the Chamber understands the Government’s dilemma of shaping tax policy in the next few years during the introduction of the new regime for lower corporation tax. That said, the Chamber believes that it would be preferable to err on the side of caution and retain the current 27% rate until the lower 10 per cent rate is introduced in July 2010.
Further action needs to be taken to reduce Government expenditure.
What the Chamber is most concerned with is increases in fixed costs which are not performance-related, i.e. where businesses have to pay, whether their businesses are profitable or not. Increases in fixed costs at this time could be very difficult for many traders to absorb. Introducing such increases in fixed costs in the current climate is likely to lead to job losses thus negating the objective of raising extra revenue for Government.
The Chamber also believes there are other methods of boosting revenue: Further action needs to be taken to reduce Government expenditure, not least the costs of civil service pensions and clamping down on the abuse of sick leave in the public sector. The private sector may have tolerated these excesses in the past but when their own businesses are at risk, many of the membership are losing patience with having to pay for continued poor service and the ever-increasing costs of the public sector. With inflation expected to run at negligible levels and private sector wage settlements following inflation, wage restraint in the Public sector is crucial.
In the latest accounts, the Government Auditor commented on the improvements made by Government in collecting outstanding dues, but the fact remains that substantial sums remain overdue.
The Chamber hopes that the Government will give due consideration to these reasoned proposals in the forthcoming budget, particularly when many local businesses are already feeling the effects of the economic slowdown.