On Thursday, the Centre for Policy Studies (CPS) launched a major new report with the Rt Hon Sajid Javid MP, calling for the Government to adopt an emblematic policy to champion small and family businesses: the Simple Consolidated Tax.
‘Think Small’, written by Nick King, the CPS’s Head of Business, with a foreword by West Midlands mayor Andy Street, argues that companies with revenue of under £1 million should be given the option to replace corporation tax, business rates, VAT and Employer’s National Insurance with a simple levy on turnover, charged on a cash basis: the Simple Consolidated Tax (SCT).
Because the SCT would be voluntary, no firm would have to lose out – those which would be worse off under the new system could simply keep to the old.
The report also contained polling of voters and small businesses showing that a substantial majority feel that the Government is not currently on the side of small businesses, and that more should be done to make their lives simpler and easier.
Launching the report, Javid paid tribute to the CPS’s work and spoke of his own family’s experience of running a small business, with his father working his way up from a job as a bus driver to running market stalls to owning a ladies’ clothes shop.
In his speech, he said: “Small business is woven through the fabric of our country – 5.5 million businesses, all of them run by people from many different backgrounds, different races, men and women, people of all types… they are the very heart of our society.”
He described how the level playing field that small business needs was currently littered with bumps and boulders and potholes.
He concluded: “It’s our responsibility to make sure that taxes on business are low, that they are simple and that they are fair, and the CPS… is doing great work to try and put all of this into practice… we as the Conservative Party [need to] do more to reclaim our position as the party of business, but especially the party of small business, because when you look after small business you look after Britain.”
In his foreword to the report, Andy Street described how – as Managing Director of John Lewis and then as elected mayor of the West Midlands – he had come to appreciate the vital part played by small business in the economy.
The Conservative Party, he wrote, “is always at its best when it champions enterprise and entrepreneurship, and when it aims to put small and family businesses first… I strongly urge the Government to examine these proposals.”
Extensive modelling by Capital Economics shows that the SCT would be revenue-neutral for the Treasury at a rate of between 11.5 per cent and 13.5 per cent, depending on the underlying assumptions used. The final section of the report also suggests a range of other measures that the Government could and should adopt to help small businesses and sole traders.
Polling for the report found that:
- 72 per cent of those who expressed a preference on the SCT said that they would move to the new system if the amount of tax they had to pay remained the same due to its greater simplicity.
- More than a quarter of the respondents said that they’d move to the new system even if it meant paying more tax
- Both business owners and the public at large believe that the Government is not currently on the side of small business
Date Added: Thursday 16th May 2019
