It's time to take a radical approach to how small businesses are taxed
3 min read
We need to recognise that some aspects of taxation are outdated and have not kept up with the changes that small businesses must contend with, says Derek Thomas MP.
I am often contacted by small business owners who are being hampered by today’s taxation system. 87% of business enterprises in my West Cornwall constituency are classed as “micro businesses ” meaning they employ less than 10 employees and 99% of businesses in my constituency are SMEs employing under 250 workers. These small, locally run businesses provide the lion’s share of jobs and are the drivers of our local economies. This is also the case elsewhere in the country which is why understanding how the tax system helps or hinders small businesses is so important and is why I was pleased to be able to hold a Westminster Hall Debate on the subject.
Since being elected in 2015, I have dedicated a considerable amount my time to meet with and understand the issues facing small businesses. In fact, I had a small business of my own up until the time of my election. I believe that the Conservative government recognises the considerable contribution of small businesses and I acknowledge and appreciate the work that has been done to address the tax burden and support these small employers. Many of the 3 million jobs created since 2010 are within small businesses and this in part is a credit to Government policy.
There is no shortage of priorities for the Government, and navigating our way out of the EU will be time consuming to say the least. However, I believe more needs to be done to help small businesses. Now is the time to take a radical approach to the way businesses are taxed. We need to recognise that some aspects of taxation are outdated and have not kept up with the changes that small businesses must contend with.
While reformation will be a challenge, it will undoubtedly yield benefits to our national economy including by improving productivity, driving wage growth, boosting full time employment and spread wealth across all corners of Great Britain.
From my conversations with business owners, I believe that the Government needs to raise the VAT threshold, reform business rates and properly consider the impacts making tax digital before a compulsory roll out.
Businesses are struggling to cope with the financial and administrative burdens of these taxations, whilst operating on an unfair playing field compared to online shops and supermarket home delivery services. A taxation system that discourages small business growth will have reduced employment opportunities, reduced Government tax income, depressed town centre activity and a lack of diversity between enterprises.
By making sure that small business growth is not stifled by out of date and grossly unfair taxation systems the Government will send a clear message that Brexit does not mean that important domestic priorities are not being left on the back burner.
Derek Thomas is the Conservative Member of Parliament for West Cornwall and the Isles of Scilly (St Ives)
PoliticsHome Newsletters
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.
