Seeing the words “emergency”

and “budget”

together offers about as much assurance as the words “crash” and “landing”.

But only themost optimistic person would argue that major changes are not needed to sort out the nation’s finances.

The only substantial grounds for disagreement between the three main political parties at the last election were how fast and how deep cuts to public spending should be.

The Tory-Lib Dem coalition has opted to go for about £6 billion this year, while raising revenue through tax rises, with VAT and Capital Gains Tax (GCT) the most likely to be targeted.

Understandably it is this latter possibility that has worried the business community.

Setting out what it would like to see in the Budget, Sussex Enterprise, the county’s chamber of commerce for Sussex, opposes any major increase in CGT.

It has also warned against an increase in employer National Insurance (NI) contributions, believing it would stifle long-term investment in business.

A planned NI increase of 1% is due to come in next April.

Sussex Enterprise would like this abolished with the shortfall made up by an increase in VAT.

It also urged Mr Osborne not to make deep cuts to capital investment as it said infrastructure projects support economic growth, while calling for him to introduce an immediate two-year freeze on the total public sector wage bill.

If a rise in CGT is unavoidable, Sussex Enterprise would like clear and concrete details of which kind of business activity would be exempt.

Mark Froud, Sussex Enterprise chief executive, said: “The Chancellor faces a difficult balancing act. The right choices would put business growth at the very heart of Government policy and the Budget is an opportunity for it to write a ‘fit note’ for the economy.

“The Government must avoid punishing newtaxes that negatively affect private sector growth.

“Any short-term revenue gains would be outweighed by longer-term economic consequences, from reduced business investment to lower rates of job creation.”

A large increase in CGT is also opposed by the Federation of Small Business (FSB). The organisation also points out that small businesses do not have the financial buffers available to absorb an increase in VAT in the way that larger enterprises can.

Trevor Constable, chairman of the Worthing and Adur Branch of the FSB, said: “While the FSB does not want to see taxes increased we understand that reducing the budget deficit is a key priority. The Chancellor must use the Budget to set out his pro-business credentials and offer something to stimulate growth.

“Private sector growth is the best method of cutting the deficit, keeping taxes low and absorbing the staff that will lose jobs in this round of budget cuts. It is imperative that any changes to CGT or VAT go hand-in-hand with an ambitious plan for helping economic growth through allowing small firms to grow, invest and innovate.”

Mr Constable called on the Conservatives to go beyond their election manifesto proposal to cut employer NI contributions for new companies only.

He said: “Proposals to give new firms a NI holiday do not go far enough and will not help those businesses who have been running for a couple of years and want to expand by taking on staff.

“By cutting employers’ NI contributions, the Government would benefit from the creation of new jobs and the additional revenue from income tax and employees’ NI contributions that would be paid, while freeing up business cash-flow enabling it to grow.”

Mr Constable added: “With the four main high street banks holding 83% of the SME market, there needs to be more competition for credit. This will help drive down the price of credit, which we believe is putting businesses off applying for finance.”

Making the banks more attentive to the needs of small business would be welcomed by Alan Martin, who owns Martins Hot Meals, a Worthing-based company that supplies hot meals to the elderly.

He said: “The best thing the Government could do would be to force the banks to be more competitive and make it easier to transfer accounts between them. This would make them take notice of their customers – as is done with gas, electricity and water.”

Mr Martin, who employs ten people, added: “There is no doubt an increase in VAT will lead to a loss of sales as people will be deterred from buying.

“Increases in NI contributions will also focus the smaller employer’s mind on how many people he/she already has working and whether cuts can be made there.”

Dale Bulbrook, who runs East Grinstead- based digital consultancy WEBdesigns and employs five people, warned against short-term tax hikes and cuts.

He said: “These can become longterm measures. Income tax was introduced as a temporary emergency measure in the First World War.

“Short-term cuts can ‘trim the fat’, but in the long termthe whole country will suffer if the measures are not taken with the viewpoint of long-term expansion of the country in mind.

“Anything at all that causes small business to tighten their budgets will automatically have huge consequences on the economy in the medium to longer term.”