Business Owners Suggest Government Keep VAT at 17.5%

A recent survey of small business owners suggests the government should have kept VAT at 17.5% rather than implement the recent reduction to 15%.

In Alistair Darling’s recent pre-budget report a temporary reduction in VAT from 17.5% to 15.0% from 1st December has had business owners in termoil.

Whilst larger companies are battling to changes things over including advertising, systems changes and prices lists small business owners appear to be finding life difficult.

The survey on the UK Business Forms site at http://www.ukbusinessforums.co.uk/forums/showthread.php?t=88257 asked a simple question on whether it was a good idea to implement the VAT reduction.

Whilst the voting was close the majority suggested the government should have made no change at all.

The reasons highlighted to not implement the reduction include:

• “Imagine how many man hours it’s going to take to change all the supermarket and shop prices in the UK. It will probably mean overtime and more tax paid by the workers changing the prices.”
• That retailers are having to reduce their prices any way to stimulate demand - and these reductions are far greater than a 2% savivng with most major stores having at least a 15% sales weekend (such as B&Q) with others going for 20%-50% reductions in the all important run up to Christmas where sales never use to happen
• That the reduction is too small (although it is the minimum VAT rate allowed (see below)

On a positive note the people voting to implement the 15.0% vat rate were looking at the ease of calculating 15% on prices rather than the savings that consumers would make by the 2% reduction in prices.

The UK can not reduce the VAT rate below 15% due to European legislation. Also look on the bright side as some European countries have stricter rules on when sales can occur - for example in Belgium, companies can only have sales at two precise times in the year - July and January - so at least UK stores can reduce their prices at the moment.

But the reduction in VAT from 17.5% to 15.0% seems to have left most small business owners feeling non plus by the whole idea.

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