FSB calls for VAT cut

| July 18, 2011
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The Federation of Small Businesses (FSB) is urging the Government to cut the rate of VAT in core sectors of the economy.

The suggestion comes after the FSBa��s latest Business Confidence Report, which saw a sharp fall in sentiment during the second quarter.

VAT was raised to 20% earlier this year to raise billions of pounds to trim the deficit but, according to the FSB, lowering the rate would boost economic growth and encourage consumers to spend a�� particularly in areas such as tourism.

The FSB is recommending that VAT be cut to 5% in the construction and tourism sectors.

“Consumer demand is a key barrier to economic growth so such a cut would encourage people to spend in these areas,” the Federation told the BBC.

Earlier this month, Ireland slashed its VAT rate on a number of goods, including restaurants, hospitality and tourism in a bid to boost the economy and get consumers spending again.

The countrya��s Government lowered the rate from 13.5% to 9% on 1 July and it will remain until December 2012.

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