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Next Welsh Government Must Create a Secure Base for Businesses to Grow

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New research from FSB Wales shows that taxation (specifically business rates) will be a major concern for many firms as we move towards the May elections. When asked on which issues do you think should be the priorities for investment to boost recovery, ‘reducing the cost of doing business (e.g., business rates)’ scored highest by a large margin with 49% of respondents putting it as a top three priority.

The second highest priority for small businesses was ‘schemes to create jobs’ at 32%.

Businesses also noted that Welsh Government was the preferred level at which intervention should be made, rather than at local authority level.

The Wales Acts of 2014 and 2017 set out new taxation powers for the Welsh Government to exercise in Wales on income tax, land transaction tax and landfill tax. It also gave the power to institute new taxes in devolved areas.

This means that for the first time, this Senedd election will be one in which not only spending but taxation policy will be of key concern. In a key survey of businesses, 88% of firms thought that Welsh Government should use tax breaks to help create incentives for growth and investment.

Following an unprecedented level of engagement with businesses across Wales, FSB Wales published a comprehensive manifesto. Our Business is Wales – FSB’s vision for 2021 – 2026 the business organisation has called for:

  • A business rates freeze for the lifetime of the next Senedd
  • No income tax rises above England
  • Instigating a new SME test for any new Wales-specific taxes

Ben Francis, FSB Wales Policy Chair, said:

“We know that in order for Wales economy to recover from the pandemic, businesses must be empowered to grow.

“A consistent and fair taxation system is a critical part of this.

“FSB has really welcomed the steps that Welsh Government has taken to extend 100% business rates relief for hospitality, tourism and retail businesses until April 2022 – this is an important short-term step towards beginning the process of economic recovery. However, this is a more long-term conversation to be had about business rates in Wales. We want to see business rates frozen for the life of the next Parliament so that we can have the conversations needed to improve the system in the long run.

“We also hope that the next Welsh Government will commit to at the very least maintain the same tax rates as currently exist in England. By doing this, revenues will be maintained that can be used to fund public services and investment in infrastructure whilst businesses will not be at a competitive disadvantage to their counterparts in England in recruiting their workforce. Instead, it is our view that Welsh Government should focus on growing the Welsh economy and growing the Welsh tax base as a result.”