VAT rise disappointing but at least exemptions stay says BRC
The Chancellor is right to use public spending cuts as the main means for addressing the deficit but the VAT increase is disappointing.
Reacting to the Budget the BRC said it was relieved that the range of items subject to VAT won’t be expanded but increasing the VAT rate will hit jobs, consumer spending and economic growth.
However the retailers’ organisation accepts the Chancellor has tough choices to make. With retailers now clear that they face a 20 per cent VAT rise from 4 January, the approach to implementation is their key concern.
British Retail Consortium Director General Stephen Robertson said: “We didn’t want a VAT increase. It’ll hit jobs, consumer spending, the pace of recovery and add to inflation but we accept the Government has no easy options.
“It’s some consolation that the range of VATable products isn’t being extended. “Changing computer systems and shelf prices on tens of thousands of products is a huge, costly exercise for retailers. Planning for catalogues is a particular nightmare. The start date, in the middle of the busy and crucial post-Christmas sales period, will be difficult but retailers would rather have more notice than less. Six months to prepare is better than the rise coming-in this summer. Retailers will work hard to implement the increase smoothly but there must be a light-touch to enforcement at the time of introduction.”
