Brown budget short on thrills for channel

Key channel players are ambivalent about budget as chancellor cuts corporation tax and doubles higher capital allowance

Channel players reacted lukewarmly to the budget last week despite a two per cent cut in corporation tax, and expressed misgivings about the abolition of dividend tax credit payments.

But the Federation of Small Businesses (FSB) welcomed the doubling of higher capital allowance from 25 per cent to 50 per cent, for the renewal of infrastructure equipment in the first year after it has been bought.

Graeme Watt, MD of Frontline, said the budget was going to have relatively little impact on the distributor. ?It is good from a business point of view because corporation tax has been lowered but we view it largely as a neutral budget and we will be unaffected by it,? he said.

One reseller said the scrapping of advanced credit tax for pension companies could drive up overall employee costs. He also fired a shot at the chancellor for his assumption that all company pension schemes have a cash surplus. ?Pension companies will be getting a lower return on investment as tax privileges on dividend income are removed. This could drive up the cost to business of funding employee pensions and could reduce rather than increase funds for investment,? he said.

The reseller added that this might drive up channel costs which are likely to increase anyway because of the hike in fuel prices.

James Wickes, MD of Ideal Hardware, said it ?was a bit of a non-budget as there was nothing crunchy in it?. He also expressed concern that the Bank of England could set interest rates.

An FSB representative welcomed the 100 per cent increase in capital allowance on infrastructure investments as good news but warned that plans to subsidise companies by #75 for every trainee taken on could discourage business if money was offered in rebates.