FSB Wales’ new paper An Enterprising Tax Policy for Wales looks at how the next Welsh Government should develop a tax policy that supports Wales’ business community and stimulates the Welsh economy.
As Wales approaches the 2021 elections to the Senedd, we do so in the context of nearly £5bn in ‘Welsh’ taxes including taxes on income, land transaction as well as properties accounting for nearly 30% of Welsh Government’s revenue on an annual basis.
Tax plays a significant role for smaller businesses. In FSB’s UK-wide report Taxing Times FSB highlighted that on average a small business loses 3 working weeks a year to tax compliance, with well over half saying they don’t feel informed about issues such as tax reliefs available. In particular, 47% of those who responded to our survey felt that business rates and corporation tax stifled their ability to grow. A third of businesses said tax had stopped them growing their business with a further third saying it had made growth harder to achieve.
FSB has also called for:
- A commitment to no income tax increases above that of England during the next Senedd
- The next Welsh Government should maintain the 1 per cent lower band for the Land Transaction Tax between £150,000 and £250,000.
- Welsh Government to introduce a new investment relief
Commenting, Ben Francis, FSB Wales Policy Chair, said:
“Our research has shown that tax policy has a huge impact on how SMEs are able to do business.
“As it becomes increasingly clear that the economic recovery from Coronavirus is going to be a long one, the next Welsh Government must consider how every policy decision that they make will impact upon the sustainability of Wales’ firms and our ability to grow and develop a competitive economy.
“Wales needs a tax system that encourages businesses to grow and thrive. In the wake of the pandemic, we need to provide every possible opportunity for Wales’ firms to feel that they can expand and succeed.
“That’s why we’re calling on the next Welsh Government to use its new powers to protect SMEs. By introducing a SME test on any new Wales-specific taxes, the next Welsh Government should ensure that any new tax in the future does not disproportionately impact upon SMEs. Such a test would involve ensuring new taxes do not provide barriers to entrepreneurship, innovation and business growth, is not unduly punitive on certain types of businesses and is not merely aimed at raising revenue without a reasonable justification for doing so.
“The election for the next Welsh Parliament should provide an opportunity to think differently and requires all parties which aspire to govern to rise to that challenge. We now have significant levels of tax devolution in Wales and the ability to craft an enterprising Welsh tax policy that helps the Welsh economy grow. In the aftermath of the pandemic, it is absolutely vital that the next Welsh Government recognises the role these powers can play in promoting recovery”