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Delay employer NIC rise, urges CBI

23 March 2009
Categories: News , Budget 2009 , CBI , TUC , Income Tax
Further significant fiscal stimulus 'will undermine business'

A delay to the planned rise in employer National Insurance contributions (NICs) should be a central part of next month’s Budget, the CBI has told the Chancellor.

The UK’s leading business group has warned that the ‘alarming’ state of public finances rules out the option of a further significant fiscal stimulus, which would undermine business and institutional investor confidence in the UK.

In its Budget submission, the CBI has called on Alistair Darling to deliver a confidence-building package of measures on 22 April, shaped around supporting jobs, investment and competitiveness through the recession and beyond.

Among its recommendations, the CBI has outlined the following tax changes:

  • Delaying the planned rise in 2011 of employer NICs from 12.8% to 13.3%.
  • Restoring empty property rates relief to its pre-2008 position.
  • Freezing business rates for two years.
  • Introducing a temporary scrappage scheme to encourage consumers and businesses, to replace old cars, vans, fridges and washing machines with the new, more efficient models.

‘These proposals will ensure firms do not find themselves saddled with extra costs at the worst possible time,’ said the organisation’s deputy director-general, John Cridland. ‘They will also have an immediate impact on confidence and the cost of employing people.’

Mr Cridland also remarked: ‘Public finances have been battered by the cost of rising unemployment and lower tax receipts. With economic activity expected to contract by 3.3% and unemployment set to reach nearly three million this year, the outlook is already alarming.

‘Against this backdrop, a further significant fiscal stimulus is unaffordable and would lead to businesses and households retrenching in fear of higher tax bills in the future.

‘Instead, the Chancellor needs to let the considerable stimulus already in the pipeline take effect and deliver a clear and credible plan for restoring the public finances to health.’

The CBI's Budget submission was, however, criticised by the TUC.

The union body's head of economics, Adam Lent, claimed that opposition to further fiscal stimulus is 'dangerously complacent'.

'If unemployment continues to rise as sharply as it did this month, a growing crisis of consumer confidence will further depress demand for the products and services that [CBI] members produce,' he said.

Categories: News , Budget 2009 , CBI , TUC , Income Tax
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