The British Private Equity and Venture Capital Association (BVCA) has criticised the government’s pre-budget report as providing a “disincentive for international investors to base their businesses in Britain”.
In yesterday’s pre-budget report, UK Chancellor of the Exchequer Alistair Darling announced his intention to increase both national insurance contributions and the top rate of income tax after 2011. The result would be a combined tax take of almost 60 percent on the highest earners.
“With the financial services sector in virtual meltdown, international competitiveness is more important than ever,” said Simon Walker, chief executive of the BVCA, in a statement.
International competitiveness is more important than ever
He added: “This will inevitably provide a disincentive for international investors to base their businesses in Britain. The UK’s increased tax complexity and waning competitiveness will rebound to the benefit of the UK’s rivals, like Switzerland, Ireland and, increasingly, the Middle East.”
Charles Ind, managing partner of UK mid-market firm Bowmark Capital agrees that tax hikes will do nothing for international competitiveness, but believes liquidity in the debt markets is the most pressing issue.
“If government can manage to get the banks lending properly again, that will make a big difference: arguably much more than anything in the pre-budget report,” he told PEO.
Other aspects of the Chancellor’s report, which included measures to support small- and medium-sized businesses and no changes to interest deductibility, were welcomed by the association.