The Government shouldn’t use the Autumn Budget to tax its way to growth
The Government shouldn’t use the Autumn Budget to tax its way to growth, say leading audit, tax and business advisory firm, Blick Rothenberg.
Elisa Sofocli, a Partner at the firm, said: “The Government shouldn’t tax its way to growth. There will inevitably be pressure on the Chancellor, John Healey, to raise additional revenue via tax rises at the Autumn Budget as the fiscal position comes under more strain – with the cost of Government borrowing now at a twenty-eight year high. But every tax decision needs to be considered against its potential impact on economic growth.”
She added: “With the Chancellor expected to set out his fiscal priorities on Monday, businesses will be looking for more than a commitment to balancing the books. They need to understand how the Government intends to reconcile the need for additional revenue with its equally important ambition to grow the economy.”
Elisa said: “There is a danger that tax becomes the easiest lever to pull when the public finances are under pressure. But repeatedly increasing taxes or adding complexity can create a drag on the very economic activity the Government is trying to encourage.”
She added: “For internationally mobile businesses and talent, tax competitiveness matters. The UK is competing globally for investment and skills, and businesses can choose where they put their people and capital. If the UK becomes more expensive and more complicated without delivering greater certainty, we should not be surprised if those decisions start being made elsewhere.”
Elisa said: “The answer isn’t simply more tax; it is smarter tax. If the Government is serious about growth, it should be looking at where the tax system can be simplified and made more predictable, rather than continually adding new layers of complexity. Businesses don’t just pay tax; they also pay to understand and administer it.”
She added: “That is why the current HMRC consultations matter. Consultation cannot be a box-ticking exercise where businesses are asked for their views and then discover the policy has already been decided. If the Government wants businesses to invest and grow, it needs to listen to the people who will actually have to implement these changes.”
Elisa said: “The Autumn Budget should not be judged on how much money it raises. The real test is whether it creates a tax environment that is sustainable for the public finances while still making the UK an attractive place to invest, employ people and do business. Tax and growth should not be treated as opposing forces and getting the balance wrong could make them exactly that.”
