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GFSB: Press release post Budget Speech

By 30th June 2022News

The Gibraltar Federation of Small Businesses has reacted to yesterday’s Budget announcements.

The federation says that it was anticipated that, given the unique pressures created by the pandemic, on-going Brexit uncertainty and the state of the global economy more generally, this year’s budget “was going to be tough.”

A statement continued: “Even so, the GFSB’s view is that the budget places too much pressure on business in the private sector as the source of additional revenue raising measures. It is not just Government that is feeling the squeeze of the pandemic. Businesses too are still dealing with its effects, and struggling to recover.They are also still dealing with the very substantial revenue raising measures announced in 2021 including a significant rise in social insurance, and a 2.5% increase in corporate taxation.

“Whilst the GFSB has no interest in “austerity” type measures, it is completely legitimate to question why revenue raising measures in last year’s and this year’s budget are not matched by cost cutting and improved efficiency in the public sector. The Government has stated that it is borrowing money in order to cover the existing cost of public sector salaries, and is willing to borrow more to cover the cost of pay rises. The Gibraltar public sector workers already enjoy salaries of up to 40% above their UK equivalents, and the average salary in the public sector dwarfs the average in the private sector. The size of the public sector has grown very significantly in the last 10 years with an increased annual cost to match. Meanwhile our members tell us repeatedly that these increases in numbers and expenditure do not reflect a proportional increase in efficiencies and the number public services.

“Ultimately, borrowing costs are borne by taxpayers including local businesses.

“The budget does not contain any measures that will help to incentivise businesses and revenue generation. The GFSB’s continued calls for the Business Nurturing Scheme to be reinstated has again not been heeded. There is no sign of the implementation of the updated Business Licence Act to protect Gibraltar businesses from unfair competition. Incentives announced in the 2021 budget such as the marketing tax credit have been withdrawn.

“Some measures in particular, will effectively target the smallest businesses unfairly. The new £25 per week Covid Recovery charge (£1,300 per year) does not differentiate between a business size or profitability and will certainly hit members hard. The GFSB has written to the Government asking them to reconsider this charge.

“Overall, the budget introduces additional challenges to an already tough landscape. Businesses will have to take tough decisions including cost cutting, pay freezes and increased efficiency in order to survive. Government should be undertaking the precise same exercise in order to reduce any additional and necessary tax burdens on private businesses.”