Russell stated that the government's approach towards this taxation concern had been disorganized. Nonetheless, the recent actions of the government for this problem had been hindered by the EU regulations. One example of which is the Regional Capital Venture Funds proposed by the UK administration and examined by the European Commission. The approval of this proposal could have resulted to the delay of the needed funding.
There has been no clear and definite solutions given in the case; however, it has been suggested that the simplification of the UK tax system is the most efficient step to resolve this problem. In addition, there should be a great deal of consideration for effects when new legislations of taxation are being introduced. The government should first weigh the compliance burden and the cost once these legislations are observed by small businesses. It has also been suggested that the level of complexity of employment legislations, employment protection as well as health and safety measures be lessened as it greatly affect smaller enterprises. If this taxation difficulty will continue, it is likely that small businesses will limit their needs for human resource; thereby, causing danger on possible increase on unemployment levels.
There are several ways on how the UK government and small businesses can handle the problem on taxation. For instance, the taxation system can be simplified by harmonizing it as whole. The UK administration could greatly reduce compliance cost by means of increased coordination and harmonization as this will ensure that small businesses will pay the right amount of tax. The government tax agency of UK should also have a strong of cooperation, consistency, fairness and efficiency when dealing with small businesses as well as to other types of taxpayers. There should be a considerable effort from the government in disseminating information about the country's taxation system. In this way, small businesses will comply fully to tax legislations.
Ethical Considerations and Legal Implications
One of the ethical considerations related to the issue of taxation complexity and compliance cost is the role of the government for the people. National governments are obligated to help the people, and one way of doing so is through the implementation of simple and practical tax legislations. The business owners have worked hard for the taxes that they pay; hence, the government should ensure that the small businesses can fully comply with the regulations on taxation.
Considering the problem on increasing costs due to complexity, the government should be greatly concerned that the growth of the small businesses is somehow hindered due to overpaid taxes. In addition, small businesses are considered major job providers. With the increased costs due to taxation complexity, it is possible for small businesses to limit their total workforce requirement. This in turn could greatly affect the UK economy as a whole.
Ethically, there should be a strong sense of give and take between the government and the small businesses. A consensus between these two sectors should be established. Both of these sectors are operating for the benefit of several people; hence, they should coordinate on how they can enhance their public services. In terms of taxation, the government should implement a taxation policy that small businesses can conform to. Once this has been identified, small businesses should assure their full support for the government by being honest and faithful taxpayers.
If the problem on UK taxation will continue, certain legal issues could arise and affect the entire system. One of the major legal concerns about this issue is the matter on tax evasion. As implied by the article that has been discussed, small business owners manage to overcome tax complexity simply by not complying with its provisions. This behavior is likely to influence other business owners to evade their tax obligations totally, resulting to an even worst outcome. In order to resolve this matter, the government should make an effort to encourage business owners to pay their taxes. Simple taxation systems are then the key to this legal issue.
The Future
Developments on the taxation system are clearly necessary in order to resolve the problem of the small businesses in UK. These developments are needed in order to prevent future taxation-related problems for arising, including the possible increase of employment levels as well as increased problems on tax evasion. The future of the UK taxation system can be improved by means of coordinated government-business relationships, simplified taxation systems and reduced tax legislation burdens.
Taxation is a system that benefits both the government and the people. However, some issues appear to hinder the efficient implementation of this system. In this paper, the problem on taxation complexity and compliance costs was discussed. Specifically, the case of the small businesses in UK was taken into consideration. Based from the article and relevant literature, it has been shown how these identified taxation difficulties can affect small business operations. In addition to the costs incurred, substantial time needed to understand complex legislations is required. Considering that business owners have several priorities to attend to, taxation legislations are often disregarded.
In order to respond to these taxation difficulties, it is essential for the UK government to consider the status and needs of the small businesses. The taxation system should be simplified in order to prevent the cases of overpaid taxes and increased costs. This key solution will also be helpful in preventing other relevant problems such as unemployment and tax evasion. In general, the government and business owners should have a cooperative relationship in order for them to give better services to the public.
