Darling making a serious mistake over tax, say business leaders

BUSINESS leaders warned that the Chancellor was “making a serious mistake” over tax in his pre-Budget report yesterday.

They voiced concerns over the effect on growth of an increase in National Insurance contributions.

Under the plans in the pre- Budget report, workers will hand over an extra 1% of their pay to the Government from April 2011.

However, business groups voiced their disquiet over such a move, arguing that cuts in public spending should have taken priority over tax rises.

Alistair Darling’s final pre- Budget report before next year’s general election also included a number of measures aimed at targeting top earners.

But he was accused of making populist political decisions instead of meeting the needs of the private sector as it continued to struggle amid a biting recession.

The CBI warned that the UK faced “an exodus of talent” thanks to plans to tax bankers’ bonuses.

Richard Lambert, CBI director-general, said: “The Chancellor has made a serious mistake imposing an extra jobs tax at a time when the economic recovery will still be fragile. Increasing the National Insurance contribution will hold back job creation and growth.

“He has also missed the opportunity to increase the UK’s credibility by reducing the public deficit earlier. We are no clearer as to how the Government plans to reduce public expenditure.

“We applaud the Government’s courage in beginning to tackle the thorny issues of public sector pay and pensions. There is also an encouraging package to support companies as they seek to exploit new low-carbon opportunities.