There could be taxing times ahead for SMEs
Last week, the Welsh Government published its draft budget. In it were several opportunities that are exciting and important for the business community, but there are also points of concern.
At FSB Wales, we are pleased to welcome pre-existing commitments to reforming the business rates system.
This is alongside the commitments to exploring the Swansea Metro, a third Menai Bridge crossing and improving the A470 and A487, which are all infrastructure developments that will benefit those that are seeking to travel and raise awareness of their business around Wales.Removing the tolls on the Cleddau Bridge will also unlock more areas of SouthWest Wales for small businesses and the self-employed.
A new fund to support businesses through the Brexit process could be critical in maintaining and developing a resilient and vibrant SME sector in Wales following our exit from the European Union.
However, we are concerned to see that £100m will be cut from the economy and infrastructure budget.
While we have not yet seen the full departmental budget in order to determine where the money will be cut from, we are clear that any cut to the budget should not lead to a decrease in business support. We look forward to seeing the departmental budget in the coming weeks to ensure that this will not be the case.
A New Budget for Wales has also, for the first time, introduced a conversation about new taxes that the Welsh Government could introduce for Wales.
There are four proposed new tax options, only one of which will be put to the UK Government in 2018. The options are: A tourism tax; A disposable plastic tax; A vacant land tax; and A tax to support social care
There has been no further detail from the Welsh Government on what any of these taxes could look like, and at FSB Wales we look forward to seeing the full outline of each proposed tax from the Welsh Government so that we can engage with the process and ensure that the voice of small businesses is heard loud and clear in the debate on new taxes for Wales.
On the face of it, a tourism tax should be approached with caution. As many as 98% of tourism businesses are SMEs and they have the highest rate of business closure (at 11.9%) of any priority sector.
This is coupled with the fact that tourism businesses tend to be concentrated in areas that are less diverse economically, such as Gwynedd, Ceredigion and Pembrokeshire. So taxing this major local economy could cause significant uncertainty owners.
The data around the amount of SMEs engaged in tourism also demonstrates how this tax could disproportionately impact upon small businesses across Wales.
FSB Wales would be very concerned about any tax that would disproportionately impact upon small businesses in this way, and the message this sends from the Welsh Government to business.
This is all in the context of around 11 million people visiting Wales annually, 10 million of whom are from the rest of the UK. This leads to about 35 million nights stayed in Welsh hotels, hostels and B&Bs.
We must look closely at the kind of message we are going to send to tourists looking to spend a night in Wales.
Ultimately, the main issue with all of the taxes proposed is that we do not yet know the detail in order to engage fully with the Welsh Government, which is something we look forward to doing in the near future.
Janet Jones is policy chair of FSB Wales. for tourism business
> A ‘tourism tax’ is one of a number of options being mooted by the Welsh Government in its draft budget