A new report, published by the Adam Smith Institute (ASI), calls on the Government to scrap Employers’ National Insurance contributions entirely.
In the publication, Unburdening Enterprise, the ASI lists a number of radical measures the Government could take to kick start the economy. Many of the measures would benefit small limited companies in particular.
The Institute calls the recent ‘shares for rights’ announcement and proposed business bank ‘gimmicks’ which will make very little difference to the prosperity of limited companies.
What recommendations does the report make?
The report’s author, Vuk Vukovic, makes the following policy suggestions:
1. Abolition of Employers’ NICs. A tax originally created to protect workers during periods on unemployment places a significant burden on small businesses.
2. Reduce the number of regulations small firms have to comply with – ‘one of the most severe constraints to UK competitiveness’ according to the author.
3. Make hiring and firing easier for small firms who are fearful of Tribunal claims. The report describes the benefits which could be derived from creating a more flexible workforce.
4. A reversal of the most recent April 2012 hike in business rates.
5. Not complying with EU rules which are targeted specifically at small companies. The ASI estimates that the economy could benefit to the tune of £100bn per year from this alone.
6. Help small companies with late payment issues.
7. Removing the National Minimum Wage to increase youth employment in particular.
The report makes a compelling case for the Government to not only ease the administrative burden on small companies, but also to reduce taxes significantly.
The Institute claims that the removal of Employers NICs could result in the creation of half a million new jobs. The report cites recent high profile studies which found that between 44% and 60% of small firms surveyed would hire additional staff if the tax were abolished.
You can read the report here (PDF format).