Business group calls for time limit on tax increase

As the Chancellor prepares for today’s first budget speech,  the Federation of Small Businesses (FSB) is urging him to strike the right balance with any tax increases.

With the Coalition Government having not ruled out a rise in the VAT rate in the Emergency Budget on 22 June, the FSB is urging the Government to be mindful of how the tax will affect real businesses.

If the Government does decide to increase VAT, the FSB urges that it must ensure that small businesses are given time to prepare, as moves by the previous Government to reduce the VAT rate for a limited period cost small firms £1,500 in administration alone.

The FSB is calling for a time limit to be set on the increase, providing certainty for the small business community and allowing them time to plan for the eventual reduction.

John Walker, National Chairman, Federation of Small Businesses, said:

“Small businesses do not have the financial buffers to absorb increases in VAT as big business does, so it is imperative they are given time to plan. If the Government truly is a low-tax administration, it must include a sunset clause which would put a time limit of the length of time VAT is increased.

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