Tax breaks would help tackle the recession, says FSB

The Federation of Small Businesses (FSB) has called on the Chancellor to introduce tax reliefs for businesses in the forthcoming Budget.

The business group also wants to see a new structure for dealing with the relationship between banks and commercial customers.

In its submission to the Chancellor, the FSB proposed automatic rate relief for small firms, an increase in the thresholds before income tax and National Insurance contributions are payable and an independent Corporate Mediator to work with banks and businesses.

Under the FSB plan, the Corporate Mediator would act as an autonomous intermediary between the banks and business customers, negotiating a solution when disputes arise, solving financial problems for business owners and ensuring that there is clear communication of the various support packages on offer to the business community.

The FSB went on to urge the Chancellor to raise income tax and National Insurance thresholds to £10,000 in 2009, so putting money back into the pockets of employees and cutting the cost of employing staff for business.

This, the FSB argued, would lift those on the lowest incomes out of paying tax entirely, including many self employed small businesses owners, and reduce the number of people claiming tax credits.

Lowering small business overheads was another priority for the FSB. With business rates the third highest expenditure for small firms after rent and wages, the government must make rate relief automatic, the group said.

John Wright, the FSB’s national chairman, commented: “The Chancellor is about to announce possibly the most crucial budget in decades and he has got to get it right. The government must take decisive action to inject life into the economy and resolve the big problems faced by small businesses: the double whammy of irregular cash flow and a lack of finance from the banks.

“The FSB has come up with strategic solutions to these problems in calling for the Chancellor's next Budget to include a Corporate Mediator to rebuild the relationship between banks and business; alternative banking solutions such as the Post Bank; and making rate relief automatic – at no extra cost to the Treasury at all.”

Mr Wright added: “Tackling rising unemployment is also going to be vital. Wage subsidies for employers and employees moving towards short-time working, coupled with raising personal tax thresholds to £10,000, will put money back into the pockets of staff and the businesses that hire them.”