IT industry calls for tax breaks on broadband and training in Budget

Business and IT groups are hoping for tax incentives in tomorrow's Budget to encourage investment in broadband and help the UK...

Business and IT groups are hoping for tax incentives in tomorrow's Budget to encourage investment in broadband and help the UK compete with low-cost services from overseas.

Jim Norton, senior policy adviser for e-business and e-government at the Institute of Directors, urged chancellor Gordon Brown to introduce 100% capital allowances for investment in new network infrastructure.

"This would help people who want to lay, for instance, higher bandwidth infrastructure and get very high bandwidth broadband to homes and small businesses," he said.

"BT has done well to get broadband across the whole country by this summer, but the big question is how you get it to run much faster. The answer is to get more competition in the last mile [connecting BT exchanges to homes and business]."

IT suppliers' association Intellect called on the chancellor to introduce incentives for investment in equipping the workforce with new skills. It also repeated a call for the research and development tax credit to be raised from its current level of 3.75% to 10%.

"We must accept that the UK is facing rising competition from low-cost economies using new technologies, highly educated and skilled workforces and mobile capital within a rapidly changing global market," said John Higgins, Intellect's director general.

"To compete in this market, we must become a knowledge-driven economy and successfully exploit knowledge for wealth creation across all industries and sectors," he added.

Philip Virgo, strategic adviser at the Institute for the Management of Information Systems, said the government should allow firms to deduct money spent on training from their tax bills.

Read more on IT for small and medium-sized enterprises (SME)

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