Len Shackleton, IEA Editorial and Research Fellow, has given his thoughts on Liberal Democrat leader, Ed Davey’s proposal that the government to cut taxes to small businesses. Davey’s plan would see the recent 1.25% increase in National Insurance scrapped and Employment Allowance quadrupled for two years.

Len argued that despite Ed Davey moving in a positive direction, that more should be done to reinvigorate small businesses in the wake of lockdown.

“While it is good to see the Lib Dems showing awareness of the problems of micro businesses, these particular proposals may not be the answer” 

“They are time-limited when businesspeople need longer-term reassurance. Any exemptions for smaller outfits inevitably create a cliff-edge effect where growing employment from 5 to 6 employees involves a greater cost than expanding from 4 to 5.”

“The government would be better advised to cut taxes while reforming business rates, merging national insurance and income tax and finally lighting a bonfire of regulations.”

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