Category: Employment Law, Taxation and Legislation for Contractors

Chancellor George Osborne has been warned against playing VATman in his emergency Budget next week.

The Trades Union Congress (TUC) has said an increase in VAT would cost small firms, increase tax avoidance and boost inflation.

It recognises the need for tax increases to play a significant part in deficit reduction but added that VAT rises would be "one of the least progressive ways" to lower the national debt.

The TUC explained that only businesses with sales of more than £70,000 a year register for VAT, so unregistered small firms pay the tax without being able to claim it back.

Furthermore, it said an increase in VAT would provide further incentives for tax avoidance, again something which is more likely to be carried out by larger firms.

"There are much fairer ways to raise revenue such as a Robin Hood Tax on financial transactions and Capital Gains Tax," commented TUC general secretary Brendan Barber.

"The only VAT changes the chancellor should contemplate are ending the zero rates on private healthcare and education that only the rich can afford."

Posted by Sarah Putt