Tax rises could ‘harm UK economy’

Planned tax rises could pose a ‘serious risk’ to the UK economy, according to a new study by the Institute of Directors (IoD).

1,000 IoD members were asked to rate this year’s Budget measures and their likely impact on the economy on a scale ranging from ‘very positive’ to ‘very negative’.

69% of respondents rated the overall impact of the Budget as negative or very negative.

Unsurprisingly proposed increases in tax were widely condemned, with 84% of participants rating the 0.5% rise in national insurance contributions as negative or very negative.

Government plans to impose a 50% rate of income tax on earnings in excess of £150,000 were also criticised, as was the intended withdrawal of personal allowances at income above £100,000.

Commenting on the results, Richard Baron, Head of Taxation at the IoD said: ‘The Government faces a very difficult fiscal situation, and tax increases may look tempting.

‘But in the real world, people who run businesses of all shapes and sizes believe that tax increases will damage the economy. IoD members, the majority of whom are bosses of SMEs, are deeply worried about the increase in NI. New tax burdens can mean redundancies or businesses going under.’