Tory plans for a £2,500 national insurance tax break to encourage employers
to take on new staff has won immediate plaudits from some business leaders but
run into criticism from others and from Prime Minister Gordon Brown.
The proposals were unveiled by Tory leader David Cameron as all three major
parties backed tax cuts in a bid to head off a looming slump.
Earlier Liberal Democrat shadow chancellor Vince Cable, the only senior
political leader to forecast the economic crisis, called in a Commons debate for
the equivalent of a 4p cut in income tax to be funded by tax rises for the
wealthy and a crackdown on tax avoidance.
Brown placed himself firmly in support of a worldwide fiscal stimulus for the
global economy in his Guildhall address and at his monthly Press
Conference in Downing Street, fuelling speculation there will be proposals
for UK tax cuts in the Autumn Statement, with speculation these will include
delaying increases in car tax.
Cameron said his proposal would cost £2.5 billion but be funded from savings
resulting from lower unemployment, with an average cost to the taxpayer for each
unemployed person of £8,000 a year.
The concession would be available to companies taking on staff who had been
unemployed for three months and restricted to firms that have not laid people
off in the previous three months or for three months after claiming the credit,
and subject to a cap of 20% of a business’s work force.
He also promised to freeze Council Tax for two years, ‘take family homes out
of inheritance tax’ and allow businesses to delay VAT payments for up to six
Mr Brown claimed the cuts were not fully funded, would be expensive and would
not be successful.
And Engineering Employers Federation chief economist Steve Radley said the
NICS incentive missed the mark because the number one issue for firms is the
need to maintain cashflow.
But CBI deputy director general John Cridland said these ‘imaginative
proposals’ would help some businesses keep people in work.
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