Better public procurement could offset SME tax cut

7 October 2007
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08 October 2007 | Paul Snell

A tax cut for small businesses would be possible with better government procurement, according to a pressure group.

The Forum of Private Business (FPB) said a cut in the rate of corporation tax for SMEs could be offset by more competitive public procurement.

In the 2007 budget the government raised the level of corporation tax for small businesses from 19 per cent to 22 per cent. The FPB said this is harming the productivity and competitiveness of small firms. In a submission to the government ahead of tomorrow's publication of spending plans, the group said reducing tax and regulation is a priority.

The group added if public sector procurement was more efficient and welcoming to small firms, a tax cut could be balanced with savings from deals in a more competitive supply market.

"A simpler and more open system of bidding for government contracts would allow smaller firms to take advantage, but would also allow the government to find more competitive options, saving it and the taxpayer money," said Matt Hardman, FPB campaigns manager.


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