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Last Updated: Wednesday, 17 March, 2004, 16:01 GMT
Firms hail listening chancellor
Cash register
UK plc sees the budget as mostly benign
Business groups have applauded measures in Chancellor Gordon Brown's Budget to freeze a range of taxes, tackle red tape and promote investment.

But small businesses were less happy, particularly at his decision to seal a tax loophole that has benefited one-person companies.

The Confederation of British Industry called the Budget "an innovative and meaningful package".

However, some groups feared growth forecasts were over-optimistic.

Mr Brown had heeded "warnings about damaging rises in business tax and responded to calls for measures to invest in enterprise, education, science and transport," the CBI said.

Red tape

The Institute of Directors (IoD) spotted "significant steps in the right direction to reduce red tape and bureaucracy".

We have had many government initiatives in the past designed to tackle red tape - we'll judge this one on performance rather than rhetoric
Hugh Morgan Williams, CBI
But both the IoD and British Chambers of Commerce worried that the chancellor was being too optimistic about growth, and his ability to cut public spending and avoid future tax rises.

Firms were pleased with the freezing of corporation tax, along with vehicle exercise duty, the climate change levy and other duties. One of UK plc's biggest complaints has been the growing burden of so-called stealth taxes.

The merger of the Inland Revenue with Customs and Exercise also appeased business pleas for cuts in bureaucracy.

The chancellor promised to review "the overlap between enforcement regimes sector by sector", winning the approval of the Federation of Small Businesses which says firms cannot deal with rules being set by up to 350 official agencies.

Hugh Morgan Williams, chair of the CBI's council for small and mid-sized firms, said: "We have had many government initiatives in the past designed to tackle red tape. We'll judge this one on performance rather than rhetoric."

'Unfair' reform

But the chancellor's decision to slap 19% distribution tax on previously exempt earnings by sole-trader companies was branded "unfair" by the Federation of Small Businesses.

It wipes out a tax break Mr Brown himself introduced in 2002 which had encouraged sole-traders to register as companies.

Telecoms consultant Dean Hill said he had saved "a few thousand (pounds) a year" by registering his business, Independent Telecom Analysis, as a limited company after the 2002 Budget.

The chancellor's promises to boost innovation and scientific education to help UK firms stay ahead of competitors were universally praised.

He pledged more spending on scientific innovation in healthcare, and gave tax breaks to venture capital trusts that help start ups and on investment in the first year.

These measure were "to be welcomed", said Ian Smith, managing director of software firm Oracle UK.

Whisky and films

The chancellor's determination to close tax loopholes has rattled Britain's film industry, currently enjoying a renaissance thanks to tax relief for investors.

Mr Brown offered an olive branch, by transferring the tax break to film makers themselves. He has "made things more transparent and less open to abuse", film maker Tony Williams said.

Microbreweries were among the quirkier sectors of the British economy to attract Mr Brown's largess; he doubled the amount of beer they can produce tax free.

But the Scotch Whisky Association protested that the cost of Mr Brown's anti-fraud policy of demanding tax stamps on bottles of spirits from 2006 would put Scottish jobs at risk.

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