Budget: 2001: 'Bad news for ebusiness'

A leading UK analyst has criticised Wednesday's budget for "disrupting the dynamics of ebusiness."

Ian Lynch, director of strategic advisory services at Butler Group, said the budget could cause a downturn in the ebusiness community.

"The tax code is becoming more and more complex as incentives, allowances, special tax reliefs and benefits are piled up. This can create a confusing mess, which can distort the behaviour of business. By offering capital allowances to businesses implementing new technology, the government is disrupting the dynamics of business," claimed Lynch.

"Technology is not a bandwagon. Businesses should invest in technology when it serves a specific goal, not because their competitors are using it or because they can get a capital allowance from it," he added.

Lynch also criticised the Chancellor for failing to reform IR35 and for changing tax rules relating to intellectual property.

He said: "The most infamous anti-New Economy measure [IR35] of this Chancellor has survived unscathed, demonstrating once again that despite his words about encouraging ecommerce, this government just doesn't get it."

"The way in which we measure and account for intellectual capital is still fairly primitive," Lynch added. "This government thinks that it can change this in terms of tax allowance and goodwill practices but this is not an area where governments should interfere. Instead, Butler Group believes that Intellectual Property should remain for the accounting standards authorities to adjudicate."