Tax change would boost jobs

The Treasury in the US drew up a plan to impose “a tax on jobs”, this plan become valid in April. There is only one real problem, namely the opposition of the business leaders, also the CBI and the recruitment companies criticize the plan.

The financial sector has also joined the protest over the plan to cancel the VAT staff hire concession, warning it will deprive the economy of 150,000 temporary jobs.
Faced with having to pay VAT on temporary workers’ salaries for the first time since 1997, clients in the tax, banking and investment circles will respond by dismissing their temporaries.

The CBI employers and the REC asked and hoped to postpone the value added tax changes until 2011, this is the moment that they hope the job market will be re-established. But unfortunately the Treasury rejected the proposal. Besides the director of HR policy at the CBI said the plan was drew up at a bad moment, namely in hard times of financial crisis. The market still needs assistance to survive the recession. But it’s very disappointing that the government decided not to defer the tax on jobs, even they knew the plan scourge up to 150,000 temporary jobs.

Especially the extra VAT will hit many sectors, for instance financial and public services, in which tax plays an important part. The REC predicted the VAT changes will be worth $390 million. The recruitment companies said the proposals of the additional tax on jobs were drew up at a time of recession, which isn’t very promising.

According to me, the government makes a grave mistake by approving the plan of the Treasury. The economy has to stabilize before to execute plans, for instance tax changes. So the proposal to postpone the VAT changes, is better to survive these hard times. It is significant to concentrate on the balance between the economy and the consumers.

Written by Marie Maes

Source: The Financial Times
Article: Warning of tax change threat to 150,000 jobs
Published: March 21, 2009
By Andrew Taylor