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PBR: Reaction from experts and entrepreneurs

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The increase in national insurance contributions for employers, employees and the self-employed is arguably most controversial. Most people wonder why a ‘tax on jobs’ should have any place in a recovery plan.

Then there was the bank bonus super-tax, which smells like a headline-grabber to detract from less popular increases such as national insurance and the return of VAT to 17.5 per cent in January.

Entrepreneurs such as Bulldog Natural Grooming’s Rhodri Ferrier are not amused: “It looks as if Alistair Darling is operating in a parallel universe to the public and business owners,” he told Real Business.

“What was the point of the VAT reduction and why make us revert to the higher level on January 1st – a public holiday? The growth forecast was from cloud cuckoo land compared with independent predictions and the NIC increase sounds small at 0.5 per cent, but as a proportion of what we’re already paying it’s absolutely huge!

“Darling is trying to dig himself out of a hole and in doing so had to appear to throw something at the City, but the bonus tax is a bit of a smokescreen; there wasn’t much honesty in the report. If there’s any group of people capable of avoiding tax is wealthy City workers.”

Meanwhile Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA) wrote on Twitter: “The clear message from today’s PBR is that we will all have to wait until after the next election for the real changes.

“Tax increases and the bonus levy will have limited effect on the deficit but they will be painful for individual tax payers. Whatever the outcome of the election, I predict a tough tax regime in 2010, which will tackle avoidance measures.”

But Mary Monfries, head of private business at PriceWaterhouseCoopers, pointed out that some good had come from the PBR: "Help to enterprise includes extension of the ‘time to pay scheme’; a freeze on corporation tax rate for smaller businesses; and continuing empty property relief – all helpful.

"Continuation of Enterprise Finance Guarantee will get mixed reception, however, many businesses don’t believe this has made a difference ‘at the coal face’. The £500m Capital Growth Fund announcement welcome but enterprise will reserve judgement until businesses see the funding actually reach the companies that need it."

Related articles:PBR news tickerAll the PBR news here on Real BusinessDarling to banks: ‘Invest in small firms’

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