SMALL BUSINESSES HIT HARD BY BUDGET - HUHNE (Eastleigh Liberal Democrats)

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SMALL BUSINESSES HIT HARD BY BUDGET - HUHNE

March 23, 2007 12:00 AM

Eastleigh MP Chris Huhne has criticised the budget for hitting small businesses and sole traders in a way that will disproportionately hurt Eastleigh.

Mr Huhne said that small business was the backbone of the local economy and it was "incredibly short-sighted" of Gordon Brown to raise business taxes on businesses that will fuel future growth.

"These companies will be hit by a staged rise in the small business corporation tax rate from 19 per cent to 22 per cent in 2009 which seems to be aimed at stopping one-person businesses from setting up as a company to cut their tax burden.

"I am very disappointed by this decision as it will particularly disadvantage areas like Eastleigh where there are a lot of small businesses and people starting out on their own" said Mr Huhne.

The Chancellor's budget essentially shifts the tax burden from bigger businesses that are said to compete overseas onto smaller businesses with their main focus at home, Mr Huhne said.

"However, these small businesses are the acorns from which future big businesses will grow. It is incredibly short-sighted to raise the tax burden on them, and will hit growth prospects in areas like ours just when we least need it".

In exchange for a rise in the small business corporation tax rate, small businesses will be able to benefit from new investment allowances but Mr Huhne said that this would be of substantially less value, as the Treasury had calculated.

Mr Huhne also criticised the complexity of the tax system, which imposed unnecessary costs on small business people when they should be free to go out and grow their business rather than tangle with red tape.