IT'S a tough time to be doing business in the UK. Firms across the board are facing a persistent cost-of-doing business crisis, coupled with low productivity.
And just last week, the OECD found that the UK is now the only country in the G7 still saddled with rising inflation.
It’s not just that - we’re also lagging behind OECD and G7 nations when it comes to business investment in people, innovation, and capital.
It’s a gap that’s at risk of widening unless we take action to support UK businesses, like those here in Northern Ireland. That’s why the CBI have launched our case for tax reform - our Business Tax Roadmap.
We’re calling on the Government to deliver a comprehensive plan for business tax to turbocharge green investment and boost competitiveness.
Businesses are clear in their ask: we need a competitive tax system now – one that is both simple and proportionate. That starts with addressing the challenges of a changing world.
With the UK running behind on its net zero targets, we need a business environment that fosters, not stalls, green investment.
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Firms across Northern Ireland are looking for a tax strategy that boosts green investment ambitions.
Green growth has been called the “economic opportunity of the 21st Century”, but firms want the opportunity to turn that goal into a reality.
From battery storage to electric heating, biogas to on and offshore wind, NI is perfectly poised to become a green energy hub that punches well above its weight on the world stage.
We can even boast a storage/injection ready gas network – with capacity already in place at Larne Lough salt caverns – and that’s before we mention our incredible supply chain expertise in areas like manufacturing, construction, and high-tech engineering.
Firms see the opportunity, they’re ready to expand and pivot to the needs of a future green economy, but they’re waiting for those concrete signals from government.
That’s an area the CBI will be doubling down on in the days and weeks ahead – establishing the size of the green growth prize on offer to the UK economy and how we can seize it.
Businesses are also looking for a tax system that supports them to invest in their people throughout their careers, wherever they work – with more flexible tax support for training and employment.
Finally, as the population ages and needs change, firms want to see a real review of how businesses contribute to their local communities, to ensure it is fair across sectors and regions.
They need a long-term vision, not sporadic piecemeal measures that simply look to plug gaps here and there. With international competitors already outpacing us - particularly the US - with the Inflation Reduction Act - there’s no time to waste.
But it’s not just about making the most of the opportunities of tomorrow. Tax reform is also a chance to get rid of some of the everyday obstacles blocking productivity now.
The UK’s tax code is one of the longest in the world. In 2022 alone, smaller UK businesses spent up to 2 per cent of turnover on tax compliance – that’s the third highest in Europe.
If we’re serious about improving productivity and strengthening the UK’s competitiveness, cutting compliance costs is crucial.
Government doesn’t just need to pick up the pace on making tax simpler for business – we also need to speed up the digitalisation of our tax system to create a framework truly fit for the 21st century.
That includes making sure taxpayer data is collected and stored in a way that’s both ethical and transparent. And we have to use it smartly – like through avoiding duplication of data requests and making it easier for taxpayers to speak to HMRC.
Not only will that make things easier for taxpayers, but it also has the potential to make a real difference for businesses. Better digital administration of taxes through web-based software could bring productivity gains – measured by sales per employee – of up to 11.8 per cent.
All of this is not to forget that we have our own distinct competitiveness challenge here in Northern Ireland. Firms operating in the Republic of Ireland are able to take advantage of a lower rate of headline corporation tax.
But getting the overall tax and regulatory environment right across all parts of the UK – making it more stable and attractive to investment – really does matter to NI businesses. That’s a message policymakers must heed.
In an increasingly competitive global market for investment, we need to unleash enterprise, not hold it back. Failure to act now will cause investment to flow elsewhere - just when we need to leverage it most.?
Creating a tax system that’s fit for purpose is the first step towards making sure the UK economy can once again be a leader – not a follower – in areas like green growth and digitalisation.
Angela McGowan is Director of CBI Northern Ireland
