Richard Threlfall, UK Head of Infrastructure, Building and Construction at KPMG comments ahead of this week’s Autumn Statement:
“The last few months have seen a real pick-up in the UK economy but the challenge now is to maintain the momentum. Above all the Government must bring forward proposals in the Autumn Statement to encourage business investment. Measures that focus exclusively on personal affordability and taxation may make good politics but could undermine our economic recovery.
“Our own research in the last few weeks has shown that one of the most popular measures for businesses would be the re-introduction of tax allowances on capital investment. Respondents to KPMG’s tax competitiveness survey published this Monday cited it as the most popular issue. * This is hardly surprising giving the UK is the only country in the G20 not to offer tax relief for infrastructure investment. According to the survey, the effect of tax reliefs on infrastructure investment could be very significant, including increased employment levels, additional capital expenditure and an increase in research and development spending.
“Business investment plans also depend critically on clarity over the Government’s infrastructure plan. The recent KPMG-CBI infrastructure survey showed that 95% of firms are concerned about the cost of energy and 90% are concerned about security of supply. 73% of respondents believe the local road network has deteriorated in the last five years. I expect the Government this week to focus the National Infrastructure Plan on infrastructure delivery, but there remains a pressing need to set out a compelling vision that unlocks private as well as public investment.”
Notes to Editors:
*KPMG’s Annual Survey of Tax Competitiveness 2013 is based on Interviews conducted with 102 senior tax decision makers in the largest UK listed companies and foreign-owned subsidiaries in September/October 2013 by Gulland Padfield, the specialist consultancy.
With an eye on the forthcoming Autumn statement and thinking of what measures might drive UK growth, respondents were asked what single specific tax or regulatory measure could be used to drive growth over the next 12 months. The most popular cited was to provide tax relief on capital investment, followed by simplification or reducing complexity and then by increasing certainty.
The impact of these potential changes could be significant, according to the survey. Respondents were asked what effect the changes they suggested might have on their own organisations. Results from those who were able to quantify the impact of their proposed measures suggest that cumulatively for this small group, the effect adds up to over 10,000 jobs (16 companies), a further £37m in research and development spend (seven companies) and £700m additional capital expenditure (17 companies). Looking purely at those who suggested tax relief on capital investment and were also able to quantify the impact, the figures are: an increased head count of 800 (three companies), additional capital expenditure of £320m (10 companies) and an increase in research and development of £35m (three companies).
KPMG Tax Competitiveness Survey 2013
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