Tax increase protesters are not thinking of the big picture

Apr 12 2010 by Kevin Rowan, The Journal

WHAT is surprising about the political furore around business opposition to potential National Insurance increases is the 'surprise'.

The timing of the wrangle has provided a very clear and stark dividing line between the two main political parties; the Conservatives clearly disinclined toward increasing taxation on business, suggesting that the economy can be balanced by eliminating waste in the public sector.

The Labour Party would suggest that these modest future tax increases are necessary to protect public service provision.

These are not insignificant differences, the future of public services and how they are funded appears to be the main battleground in this general election, influenced heavily, of course, by the differing approaches to the best road to recovery – the Labour government inclined toward public spending to continue to stimulate the economy and support job creation, with the Tories reverting to type and getting the state out of the way and allowing the market to determine where future prosperity may come from. For these debates about fundamental choices to be overcast with the amazing revelation that businesses are opposed to tax increases is as bizarre as it is disappointing.

The fact is the businesses concerned about the proposed NI increases would have always opposed tax rises, just as they oppose employment protections for workers, decent pensions for all, improvements to the law that increase the ability of parents to balance work and family life.

Businesses generally want to maximise profits. One of the ways to do this is to minimise costs, including the tax they pay.

In this instance there is a bit of déjà vu. These arguments remind me of the pre-1997 voices suggesting the introduction of a National Minimum Wage would cost a million jobs.

Of course we all know that, in fact, over a million additional jobs came into the economy and there remain many, many more people in employment, even in this region, than was the case then, despite the recession. On job creation and economic growth it is worth thinking about the impact on the northern regions of experience of different political approaches.

Perhaps too this is a case of business protesting a bit too much. There’s plenty of evidence that shows taxation levels in the UK for businesses are actually pretty low, especially compared to our international economic competitors or comparators. This proposed NI increase is also relatively minor. On average salaries the increase cost to businesses is less than two hundred pounds per worker.

Some of the business leaders that are protesting will pay more than that for a ‘working’ lunch. To suggest, for them, this is a dividing line between employing or not additional workers is totally bogus or at least wholly disingenuous.

Business, of course, benefits from the very things these taxes are levied to fund; education and skills, health – significant public spending priorities that contribute directly to business success. The NI proposals should be welcomed, not condemned.

Kevin Rowan, regional secretary, Northern TUC