‘Harsh Budget in harsh times’ but tech to flourish


Budget mitigated by new business certainty, and technology opportunities abound

Key changes set out in the coalition government’s emergency Budget last month affect the mobile industry. The 2.5 per cent increase in VAT from January 4, 2011, the increase in the state pension age to 66 and plans to scrap the proposed landline duty and support private broadband investment are chief among them.

Other measures announced included changes to National Insurance (NI) contributions, reducing the corporation tax rate, decreasing the small companies tax rate, extending the Enterprise Finance Guarantee Scheme and an NI relief scheme for businesses set-up outside London, the South East and the East of England for three years.

Timico head of indirect channel Iain Sinnott said: “The Budget definitely painted a gloomy picture and with changes to NI, increases in VAT and a number of benefit cuts, the pain will be shared by us all. However, perhaps the severity of the message will remove the uncertainty that has stifled decision making and enable businesses to both plan for and invest in the future.

“We now understand how much it will cost to do business. Those organisations that deliver VAT chargeable items for the consumer market will know they must absorb the rise to protect growth. As employers we know the blend of grants, tax breaks and taxes that will affect us and we know the pressures that will be affecting our customer base. It is good to have that clarity.”

TMTI managing director Crispin Thomas also saw positives: “My real feeling is good communications are essential for companies and individuals, and that spending will remain static, especially as we are driven to buy the new iPhones and HTC Android devices. VAT increases will up our mobile bills a small amount but there is always the downward pressure on calls from the regulators, so this may not really be noticed.

“Small points like the scrapping of the landline tax and help for investment in broadband might be helpful but a percentage point off corporation tax is real money back into company coffers.”

See full article in Mobile News issue 467 (July 5, 2010).

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