Business tax increase 'will fuel unemployment'

Increasing taxation on small businesses in the forthcoming Pre-Budget Report will only serve to raise levels of unemployment, the Federation of Small Businesses (FSB) has warned.

Following research conducted for the FSB by the Centre for Economics and Business Research (CEBR), the business group is calling on the Chancellor not to raise taxes in his Autumn Pre-Budget Report.

The CEBR research suggests that raising taxes for small businesses would cost the UK billions of pounds, by prompting the loss of hundreds of thousands of jobs and bringing about a further increase in UK economic debt.

The FSB is also urging the Government to take steps to make it easier for small employers to take on staff, by cutting payroll taxes, reducing business taxes (including corporation tax) and freezing employers' national insurance contributions (NICs).

The organisation says that small businesses are set to be hit hard by the 1p increase in employers' NICs, which is set to take effect in April 2011.

The CEBR research suggests that the rise in NICs will cost the economy 57,000 jobs.