The rate of corporation tax for small companies is set to increase by 3% while the rate for large companies is set to decrease by 2% under the Chancellors 2007 Budget.

Gordon Brown explains the increase in the small company tax rate as a deterrent to tax motivated incorporation. This is where a person incorporates a company and provides a contract for services to another company, rather than being employed directly by them. This enables the "employee" to pay themselves dividends rather than salary and thereby avoid having to pay national insurance.

However, the practice is legislated against since 2000 when the government introduced IR35 so that this budget increase is just simply bad news for genuine small companies taking on board the personal risk of running their own company. Rather than encouraging an entrepreneurial spirit this is another disincentive to leave paid employment and start a business. The little profit you make will be cut by another 3% while larger companies can continue to grow and put small companies out of business.

Already little companies face undue delays in registering for VAT making them uncompetitive as their costs are higher by the amount of VAT they can't reclaim. Now another 3% is set to be cut from their earnings. It would seem as if the Government would prefer if there was just one large company in which we were all employees.

From what you are saying it would appear that Brown wants you all to work in one big company and pay your tax "like good little people", go home, pop the ready meal in the microwave, sit on the couch watching telly and develop obesity.

At least in Ireland our budget actually gave encouragement to the small business by announcing a raft of changes in administrative procedures that will give the small companies a shot in the "working capital" arm.

Britian is a G8 country, and has spawned thousands of enterpreneurs, but for some reason her government appears bent on killing innovation, if you are a budding enterpreneur come to Ireland we will help.