The Government should involve small businesses more in its tax-making decisions, the Forum of Private Business has said.
The Government announced it would be setting up a new 'tax forum', made up of senior representatives of multinational companies, to tackle the problems of the UK's tax system.
It will take on high-profile representatives of big business, including Tesco boss Sir Terry Leahy, and celebrity entrepreneurs such as Sir Alan Sugar and Sir Richard Branson.
But the FPB said it believes it should be the UK's smaller firms, which suffer most because of the disproportionate tax burden, that are placed at the heart of any consultation on taxation. While the tax rate paid by bigger companies was cut in the 2007 Budget, smaller firms' corporation tax has gone up from 19 per cent to 21 per cent over the last 12 months, and will increase further in April 2009, to 22 per cent. Combined with an increase in employers' National Insurance Contributions in 2003, these changes have hindered the productivity and competitiveness of many smaller firms.
FPB policy representative Matt Hoodman said: "We can accept that the large multinational companies have more complex tax concerns than most small businesses, but the impact that higher taxes have on our members is just as damaging.
"Doing a better job of consultation, and discussions with the taxpayer, would help them understand the reasoning and process behind tax changes. By that logic, the Treasury should consider putting together a similar group focused on the process of small business taxation."
