Bill Sedat Frater is an entrepreneur with several London-based businesses.Â
With the launch of the Conservative manifesto, it becomes clear that while there are some commendable proposals, the 70-plus page document falls short of what is needed to support small businesses and foster a much-needed dynamic economy.
The Tories have pledged not to raise corporation tax, and aim to help small businesses by periodically reviewing the VAT threshold to allow for a smooth transition after VAT registration.
They claim to support the risk-takers and entrepreneurs who drive the British economy, but are yet to recognise that simply not raising tax rates or reviewing the VAT threshold is not sufficient to address the multifaceted challenges faced by small businesses.
High operational costs, intense competition, and difficulty in hiring and retaining skilled employees are just a handful of the problems small businesses face and cannot be addressed solely by a maintaining the current tax rate.
By lowering corporation tax substantially, not only will small businesses benefit from a competitive advantage, increased profitability, and cash-flow, there is no doubt that it will also incentivise entrepreneurship.
They have also pledged to not raise the main rate of National Insurance contributions (NICs) and abolish of the main rate of self-employed NICs.
This does not go far enough, nor is it entirely accurate, as the Conservatives have agreed to keep income tax thresholds at current levels until 2028 – this means that they will not adjust these thresholds in line with inflation or rising wages, potentially resulting in higher taxes for some people.
Another concern for Britain, particularly in the post-pandemic era, is the challenge of economic growth.
The latest GDP statistics reveal that the British economy experienced no growth in April, prompting questions about the Conservative Party’s strategy for economic growth. Can we achieve sustained growth while deliberately restricting access to the workforce needed to drive it?
Pledging to raise the Skilled Worker salary threshold and increase all visa fees poses another significant hurdle, specifically for small businesses.
These enterprises often lack the flexibility to meet higher salary thresholds and may struggle with the financial resources required to hire skilled workers with higher salary requirements. Small businesses play a crucial role in driving innovation, but such visa restrictions impose financial, operational, and administrative burdens, ultimately limiting their potential for growth and expansion.
Additionally, they pledge to reduce the upfront costs for the majority of first-time buyers by abolishing Stamp Duty for homes up to £425,000. However, this initiative falls short of what we truly need: the complete abolition of Stamp Duty for all.
Despite a decrease in average house prices in England, purchasing a home in London remains an elusive dream for many. The existence of Stamp Duty will continue to impose an unfair financial burden, prevent growth in the housing market, and hinder much-needed investment, particularly in areas requiring development and regeneration.
While the Conservative manifesto attempts to tackle today’s economic challenges, it falls short of the ambition needed to support a dynamic economy and small businesses.
By not sufficiently lowering VAT and corporation tax enough, abolishing Stamp Duty, and improving visa access, the Government overlooks a critical opportunity to leverage the potential of entrepreneurs, who are integral to growth, in today’s challenging economic landscape.
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Author: Bill Sedat Frater
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