VAT Change Could Generate Thousands of Jobs from Small Businesses
The FSB claims that a VAT threshold change could create up to 35,000 jobs
The report suggests that if the VAT threshold for small businesses was increased from ┬ú70,000 to ┬ú90,000, the result would save ┬ú162m in costs and ┬ú700m in payments.
“The smaller the business, the higher the cost of VAT compliance,” said FSB chairman John Walker, according to TheBusinessDesk. “This is why the FSB is calling for the Government to increase the threshold at which a business must register for VAT.”
He continued: “If the Government is truly committed to a private sector led recovery, then it must implement a small business programme for growth to allow small firms to grow and invest – and this would be a great start.”
According to the research, the expected ┬ú13bn that will be generated when VAT rises to 20% in the New Year, and the revenue from new jobs created, would help to offset any losses to the Treasury.
Mr Walker added: “The potential loss to Government in VAT receipts by increasing the threshold to ┬ú90,000 would be more than outweighed by the VAT rise due to come into force in January, and would help to put ┬ú900 million back into small firms with the potential to create up to 35,000 jobs.”
The FSB – which has 210,000 members – recently expressed concerns over small businesses which it says will be “hard hit” by the VAT rise in January.
The organisation claims that smaller firms cannot absorb the costs as easily as larger corporations, and instead will be forced to pass on the costs to their customers, reduce stock levels, or find cost savings elsewhere, which the FSB claims will “cost jobs and undermining the Governments private sector led recovery.”