Leaders of many of Britain’s small companies have stated that the national insurance rate increase attacks jobs and will hinder the growth rate of Britain as it comes out of the recession.
The FSB or Federation of Small Businesses stated that Chancellor Alistair Darling has effectively taken away with the same hand he gave out after he deferred a one pence increase on SMEs corporate tax, but then hiked the contributions of small businesses to national insurance by about half a percent.
The move to defer the corporation tax will help out about 850,000 SMEs, but the move to increase national insurance will hurt companies and increase the rate of unemployment since companies will not be able to afford new or possibly current employees.
Chairman of the FSB, John Wright, stated that the new tax will hurt the UK’s employment rate and that since the unemployment is on the rise it is not excusable for the government to use national insurance tax hikes as a way to get revenue. Instead, Wright stated that SMEs should have been rewarded for hiring new employees to encourage job creation.
The new point hike is on top of a previous rate increase from 2008 that affects all SMEs, their staff, and those who are self employed in Britain. Workers who earn less than twenty thousand pounds a year will be exempt from the tax hike however.
Darling also announced in his pre-Budget report that the Enterprise Finance Guarantee scheme will be offered for another year.