The Confederation of British Industry (CBI) has stated that tax hikes in the recent budget have made it more difficult for companies to hire new talent. The changes, including an increase to National Insurance Contributions (NICs) and Inheritance Tax, have been accused of causing a negative impact on business investment by the boss of the CBI, Rain Newton-Smith. During her speech at the group’s annual conference, Newton-Smith claimed that businesses across numerous sectors were “being hit by a tough trading environment that just got tougher.”
Newton-Smith also referred to a recent survey conducted by the CBI, which confirmed that almost two-thirds of the participating 185 companies believed the UK’s investment would be damaged by the budget. She stated that “tax rises like this must never again simply be done to business” and went on to say that profits “aren’t just extra money for companies to stuff in a pillowcase, but the key to investment.” She warned that “when you hit profits, you hit competitiveness, you hit investment. You hit growth.”
Several businesses have voiced their concern in the wake of the budget announcement, including Stuart Paver, the chair of Pavers Shoes. In an interview with the Today Programme, Paver discussed how the tax changes would cost his outlet shop chain more than £4.2m and, as a result, would slow expansion plans. Last week, a group of major retailers, including Tesco, Amazon and Next, wrote to Chancellor Rachel Reeves to warn of the effect of the changes. Sainsbury’s and Marks & Spencer have said they will face a considerable increase in costs, potentially leading to increased prices for customers.
Despite criticism, some have argued that asking multimillion-pound companies to pay more in taxes is one of the fairer ways to improve funding for services like the NHS. In an interview with the Today Programme, Newton-Smith agreed that “we need to see the tax rises to really help fund our public services” but called on the government to make significant reforms to improve economic growth. She suggested giving companies more flexibility around how they spend money using the apprenticeship levy, updating business rates for commercial property, and simplifying the planning system. Meanwhile, Reeves is expected to address businessmen and women at the conference and defend her budget against criticism from businesses
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