Rise in VAT ‘best option’ - Tees Valley taxation specialist
A FURTHER hike in VAT would be better for business than a rise in national insurance, a Tees Valley taxation specialist has claimed.
Vantis, the AIM-listed accounting, tax and advisory group with three offices in Teesside, described the planned 1% NI rise from next April as a “stealth” tax which could deter firms from taking on extra staff.
The move will affect 10 million middle income earners and rake in around £3bn for the Treasury, which is trying to find ways of slashing a public budget deficit of around £178bn.
Vantis said raising the “consumer tax” of VAT instead would leave firms with more cash to invest and therefore boost tax revenues.
Ray Priestman, Middlesbrough-based location director at Vantis, said: “The NI is a direct cost that will hit business owners and employees. (But) a VAT rise will have more credibility with the public.
“People will have more money in their pocket to spend how they want to spend it.”
“A higher rate of VAT will increase the cost of equipment for businesses. But they will be able to recoup the increase when they invoice customers at the new rate.”
His comments come as the Government faced calls by Tory MPs not to renege on a long-standing European agreement which currently exempts items such as food, newspapers and books from VAT.
Last week a think-tank recommended abolishing the exemptions as part of moves to tackle the spiralling public deficit, rather than imposing the planned hike in NI and the 50% tax rate on high earners.
