Home / Knowledge / News / Increase VAT threshold to create jobs in small firms, FSB
Increase VAT threshold to create jobs in small firms, FSB
09
Dec '10
Up to 35,000 additional jobs could be created if the threshold at which small firms start to pay VAT was increased, said the Federation of Small Businesses (FSB).

An FSB commissioned report by the Centre for Economics and Business Research shows that increasing the VAT threshold to £90,000, from the current rate of £70,000, could save up to £162 million per year from the reduction in red tape surrounding VAT compliance, as well as saving just over £700 million in VAT payments.

This money could then be used to create up to 35,000 jobs if on an average wage. While this will affect the amount of money the Treasury receives in VAT receipts, it will be more than offset by the potential £13 billion which will come from the increase in VAT to 20 per cent, due to come into force on 4 January 2011 as well as revenue from the jobs created.

For a small firm, an increase in the threshold would help to provide much needed cash-flow, allowing them to invest back into the business through lower prices or taking on more staff. It would also help to kick-start a much needed Small Business Programme for Growth following Government spending cuts announced in the Comprehensive Spending Review.

Small firms will be hit hard by the 2.5 per cent rise in VAT as unlike big businesses, they can't absorb the increase. This will mean that small firms will have to pass the full cost on to customers, reduce stock levels or find cost savings elsewhere – potentially costing jobs and undermining the Governments private sector led recovery.

A Programme for Growth is even more important given that latest FSB research shows that 10.4 per cent of firms expect to decrease employment over the final quarter of the year, as business confidence in future prospects and revenue growth weakened over the July to September period.

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

"The smaller the business, the higher the cost of VAT compliance; this is why the FSB is calling for the Government to increase the threshold at which a business must register for VAT.

"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.

"The potential loss to Government in VAT receipts by increasing the threshold to £90,000 would be more than outweighed by the VAT rise due to come into force in January and would help to put £900 million back into small firms with the potential to create up to 35,000 jobs."

Federation of Small Businesses (FSB)

Must ReadView All

Apparel/Garments | On 6th Dec 2016

Alibaba merges Juhuasuan with Tmall.com

In a business reorganisation, aimed at making it easier for merchants ...

Courtesy: EFI Reggiani

Textiles | On 6th Dec 2016

EFI Reggiani shows inkjet textile solutions at India ITME

EFI Reggiani, a leading technology provider of a full range of...

Textiles | On 6th Dec 2016

Indonesian textile sector urges govt to regulate imports

The Indonesian textile industry urged its government to regulate...

Interviews View All

Nuno Venda
ROQ

‘There has been an increase in demand for water based inks, rather than...

Shawn Honeycutt
Bolger & O'Hearn

‘The Indian market is interesting and rather persistent in seeking new...

Karan Suratwala
Key Textile Accessories Private Limited

Chinese imports are destroying the supply chain

Silke Brand-Kirsch
Schlegel und Partner

Silke Brand-Kirsch, executive partner of Schlegel und Partner, a leading...

Eamonn Tighe
Nature Works LLC

Eamonn Tighe, Fibres and Nonwovens - Business Development Manager of...

Eric Scholler
Groz-Beckert

The Indian market has huge potential in technical textiles, and by far,...

Pranav Mishra
Huemn

Designers Pranav Mishra and Shyma Shetty’s Huemn is known for its...

Wendell Rodricks
Wendell Rodricks

"We should not compare India and the West. There are things we do that...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH
December 2016

December 2016

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

SUBSCRIBE


Browse Our Archives

GO


Advanced Search