Call to ease tax burden on small firms

With a keen interest in journalism, I was interested to find out how the stories were found, chosen and the voice of the paper conveyed through them.

When asked to write a piece, I decided to focus on something close to home. My family has, for many years, run a refrigeration firm based in Leeds and I believe that the Government could do a lot more to aid both small businesses and manufacturing in the UK.

To start with, the costs of employing people must be reduced. I suggest a large decrease in payroll taxes. Currently, the total cost in tax of employing someone stands at 45.8 per cent.

Imagine a small firm employing 24 people with a weekly wage bill of £9,500. Employment costs on top of this are roughly £4,300, massively more than emerging economies and a ridiculous sum of money when a 40ft container from China to Yorkshire costs just £2,000.

Tax revenue lost from these cuts however must be found elsewhere. Consumption taxes would be the obvious choice with VAT increases on luxury items such as high-emission cars and alcohol.

Another idea would be to incorporate more of a property wealth tax into council taxes. A house worth £1m will pay the same amount of council tax as one worth £10m. I propose that the boundaries continue further as an easily implemented and unavoidable tax on the rich.

Next I shall quote Business Secretary Vince Cable, who said that “flexible labour markets are an essential component of a successful economy”.

He suggested labour reforms such as a rise in the period of time from one to two years that a person must be employed before they can claim unfair dismissal. He also proposed concessions for companies employing fewer than 10 people.

However, I don’t believe that the reforms go far enough. I would propose a fixed dismissal payment of £2,000 should a firm wish to lay off an employee after the two-year period; the condition being the company faced no threat of being taken to a tribunal. I would also suggest that the new legislation apply to firms employing less than 100 people.

I believe stricter regulation regarding managing directors and insolvent companies is needed to encourage bank lending to small firms and trust within the business community. Perhaps a ‘three strikes and you’re banned from running a limited company’ system could be implemented. Prompt payments should also be a legal requirement.

Judges could also be allowed discretion to make a company director personally liable for any unpaid debt if he feels fraud has been committed.

Finally, manufacturing reforms. I strongly believe an effort should be made to reduce the mountains of seemingly pointless red tape blighting UK manufacturing, such as six-weekly truck inspections, WEEE regulations, PAT testing and CSCS cards.

The Government should subsidise loans from banks, allowing manufacturing companies to buy new machinery and invest. They should also implement 100 per cent capital allowances on these goods.

Finally, Government should properly fund apprenticeships for manufacturing. Most firms have to pay and train apprentices while they are at college, with no guarantee that at the end of their training a competitor won’t offer them 50p more and they will leave.

The UK has a thriving and innovative manufacturing sector ranging from small firms to vast industry leaders. Despite this, the Government must consider far reaching supply-side reforms if it wants to continue to compete with China, India and Eastern Europe, who are all rapidly moving into more technologically advanced sectors.

Steps must be taken to boost confidence and incentives through allowing space for new investment. UK industry increasingly finds itself raising both productivity and efficiency each year with no increase in returns.