Resist pressure for Budget windfall tax, employers' groups tell Chancellor

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The Independent Online

Five employers' organisations whose members account for millions of workers will today urge Gordon Brown not to raise taxes on business to pay for a pre-election give away to voters.

Five employers' organisations whose members account for millions of workers will today urge Gordon Brown not to raise taxes on business to pay for a pre-election give away to voters.

Sir Digby Jones, the director general of the CBI, called on the Chancellor to resist political pressure to impose a windfall tax, after record profits from banks and oil giants.

He said despite press headlines, UK business profitability was lower as a share of total wealth than in either of the previous two economic cycles. "Windfall taxes may be seen in certain quarters as somehow justifiable punishment for record profits, but if highly successful global companies take the view that the UK has become hostile, they will simply move their operations elsewhere," he said.

"The economic outlook is already uncertain. Our stable economy is the result of many hard-won battles and the Government should do nothing to jeopardise it."

The EEF - the manufacturers' group - said pre-election tax cuts in his 16 March Budget could lead to the need for damaging rises after polling day. Martin Temple, its director general, said: "The Chancellor could send a powerful signal that he recognises the pressures business are facing and is prepared to support their efforts to meet intensifying competition head on."

The British Chambers of Commerce said the burden of red tape on the business sector had risen by one-third since 2004 to reach almost £40bn a year. David Frost, its director general, said: "While we recognise the need for proportionate regulation, the Government must ensure that new regulations are well targeted and business friendly. Unnecessary burdens are not a sustainable option for our firms."

The Federation of Small Businesses appealed to all political parties to cut red tape, saying the average constituency is home to 6,000 small firms.

Independent experts believe Mr Brown will struggle to meet his golden rule - to borrow only to invest over an economic cycle - without tax rises worth as much as £13bn a year.

However economists such as Michael Saunders at Citigroup believe he will be able to find £5bn to give away, shared between extra spending on key areas such as immigration and policing and tax cuts for pensioners.

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