Throughout the general election, many company formation and small business owners commented that they felt ‘unsupported’ by the government during the recession. However, the one policy they felt did help the SME sector was the government’s VAT cut in 2009.
Now, as the coalition government attempt to formulate some form of cohesive economic policy, a recent report conducted by the Federation of Small Business reveals that most small business owners think that a rise in VAT will be the first economic policy to come out of the Con-Lib cabinet.
Martin Styles, business commentator and economic advisor to the Federation of Small Business, comments; “The fact is any form of tax increase in the current economic climate will damage consumer confidence and subsequently revenue will be effected, especially across the retail sector.”
“ However, from the feedback we have received from our members, while most small business owner are fearful of the fact that VAT could rise, they would prefer this option over the so-called ‘job tax’ which was proposed in Labour’s 2009 budget.”
Philip Reece, founder and CEO of building firm ‘ Reece & Sons’, comments; “ There’s no getting away from it, any increase in VAT will have a negative impact on our already fragile economic recovery. But from my point of view if the coalition government also implements some of the more positive policies they promised in their manifesto some of the damage could be offset. And anything would better than a further increase in National Insurance.”