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Budget 2012: Liam Fox calls for business tax cuts Budget 2012: Liam Fox calls for business tax cuts
(about 4 hours later)
 
Liam Fox has called on Chancellor George Osborne to ease the tax burden on business in next month's Budget.Liam Fox has called on Chancellor George Osborne to ease the tax burden on business in next month's Budget.
The former defence secretary also wants changes to the labour market to make it easier to hire and fire employees.The former defence secretary also wants changes to the labour market to make it easier to hire and fire employees.
The Tory MP argued in the Financial Times for further public spending cuts to fund employment tax reductions.The Tory MP argued in the Financial Times for further public spending cuts to fund employment tax reductions.
But Deputy PM Nick Clegg said he favoured "tax cuts for the many, not the few" - while the GMB union said Mr Fox was "spouting... twaddle".
It is Mr Fox's first major political intervention since he resigned from the cabinet four months ago over his links to his friend, lobbyist Adam Werritty.It is Mr Fox's first major political intervention since he resigned from the cabinet four months ago over his links to his friend, lobbyist Adam Werritty.
His call comes as business group the CBI has separately urged the government to give a £500m boost to business in the 21 March Budget, through a series of "targeted and modest" tax cuts. His call comes as business group the CBI urges the government to give a £500m boost to business in the 21 March Budget, through a series of "targeted and modest" tax cuts.
In its submission to the Treasury, the CBI called on the chancellor to deliver "Plan A plus" to bolster growth and investment.In its submission to the Treasury, the CBI called on the chancellor to deliver "Plan A plus" to bolster growth and investment.
In the FT, Mr Fox said it was "intellectually unsustainable" that employment rights should stay untouched in the current economic climate. href="http://www.ft.com/cms/s/0/73176578-5cad-11e1-8f1f-00144feabdc0.html" >In the FT, Mr Fox said there was a strong argument for more spending cuts to reduce "taxes on employment" and called for employers' National Insurance contributions to be reduced.
In his most significant foray into front-line politics since his resignation last October, he called for employers' national insurance contributions to be cut across the board.
'Clearly cyclical''Clearly cyclical'
Mr Fox wrote: "To restore competitiveness we must begin by deregulating the labour market. Political objections must be overridden.Mr Fox wrote: "To restore competitiveness we must begin by deregulating the labour market. Political objections must be overridden.
"It is too difficult to hire and fire, and too expensive to take on new employees."It is too difficult to hire and fire, and too expensive to take on new employees.
"It is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical.""It is intellectually unsustainable to believe that workplace rights should remain untouchable while output and employment are clearly cyclical."
He added: "There is a strong argument for further public spending reductions - not to fund a faster reduction in the deficit, but to reduce taxes on employment. Fellow senior Conservative backbencher David Davis told the BBC cuts in business taxes might be politically unpopular, but they would boost growth.
"Although the coalition agreement may require the chancellor to raise personal tax allowances, he should use the proceeds of spending reductions to cut employers' national insurance contributions across the board. He added: "There's a growing consensus about the need for growth in the economy, there's a growing feeling that this Budget is the last chance. It takes time to work, this is the only time we can do anything about it."
"If that is deemed impossible, he should consider targeting such tax cuts on the employment of 16 to 24-year-olds, making them more attractive to employers." 'More optimistic'
BBC political correspondent Iain Watson says Mr Fox has gone on the attack - ostensibly his message is aimed at those on the left who oppose further deregulation of the labour market. But Lib Dem deputy PM Nick Clegg told the BBC while it was not wise to try to write the Budget for the chancellor - he would prefer to raise the threshold at which people start paying income tax further, to benefit milllions of basic rate taxpayers.
But he is also issuing a rallying cry for Conservative MPs, particularly those on the right of the party, who want the chancellor to cut business taxes in the Budget, our correspondent adds. "It's really important to try and put a bit of money back into the pockets of millions of people in this country, because that means that they will then feel a little bit more confident about the future, a little bit more optimistic, and maybe go out and spend a bit of money.
'Plan A plus' "That in turn will help the wheels of the economy to start really moving again."
CBI director general John Cridland said of its call: "The chancellor must use this Budget to score the growth and investment policy goals he put forward in his Autumn Statement. Paul Kenny, general secretary of the GMB union, criticised Mr Fox's intervention saying making it easier to sack workers would "increase security and conflict" and amounted to "extreme right wing drivel" from the former defence secretary.
"With our economy firmly under the international spotlight, there is no time to lose: Plan A plus must become a reality." He added: "Large companies are awash with cash. Cutting their taxes will simply add to these cash piles and do nothing to boost demand."
But Andrew Cave, of the Federation of Small Businesses, told the BBC the average business employed only four people adding: "Targeted tax cuts will deliver the kind of job creation that we need to get out of the slump we are in at the moment."
And CBI director general John Cridland urged Chancellor George Osborne to use the Budget to "score the growth and investment policy goals he put forward in his Autumn Statement".
On Sunday, shadow chancellor Ed Balls called for "decisive action" to boost economic growth and offered suggestions for tax cuts in the Budget.On Sunday, shadow chancellor Ed Balls called for "decisive action" to boost economic growth and offered suggestions for tax cuts in the Budget.
Mr Balls' ideas include a VAT cut, a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.Mr Balls' ideas include a VAT cut, a 3p income tax cut for a year, bringing forward the planned personal allowance rise to £10,000 and higher tax credits.
No tax cut could mean "a permanent dent in our nation's prosperity", he said.No tax cut could mean "a permanent dent in our nation's prosperity", he said.
The Conservatives responded by saying excessive borrowing and debt under Labour had led to the current financial mess.
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