It seems that I am not the only person concerned about the implications of hiking the VAT limit to 20 %
My trade union, FMB also appears to have a little to say on the subject with some interesting quotes as well. I’d be interested in hearing your thoughts on this, especially from other builders in the sector but also from any businesses who may be affected from the hike!
I’ve no doubt that in the short term, from now until the increase, that many businesses will see an urgency to orders for their product or service as so customers or clients can avoid the extra revenue brought on by the government. The same government that led us in to this mess I hasten to say!!
Here’s the scoop!
A VAT Increase Will be a ‘Charter for Cowboys’, warns Federation of Master Builders
18th June 2010
FOR IMMEDIATE RELEASE
An increase in the rate of VAT for repairs and maintenance work of buildings will be a charter for cowboys, warns the Federation of Master Builders (FMB) ahead of the Government’s Emergency Budget on Tuesday 22nd June.
Richard Diment, Director General of the FMB said:
Any increase in the current rate of VAT for building work would merely result in a massive boost for the informal economy because more and more cash strapped householders would resort to ‘cash in hand’ as a way to avoid paying a possible 20 percent extra cost on maintaining their home. The end result will be not to raise more money as the Chancellor intends but simply a means to drive more money into the informal economy.”
The danger of inadvertently boosting the informal economy is that more people will be put at risk by unscrupulous rogue traders who will exploit cash strapped customers. We know that two years ago more than £170 million was paid to rogue traders by members of the public and given the current economic crisis this figure will have probably increased as householders tighten their belts.
The Chancellor needs to consider carefully VAT rates because a low taxation economy is one that stimulates growth. Independent research has shown that actually reducing the rate of VAT to five percent on the labour element of housing repair, maintenance and improvement work would have a multiplier effect of more than £1 billion as well as creating more than 55,000 extra new jobs this year alone. This can only be good news for the economy as it faces the threat of a double dip recession.
Some interesting pointers to think about there!!
Be interested in knowing your thoughts on this one and how the VAT rise may affect you or your business.