BCC supports 18.5% VAT rate

Small and medium-sized enterprises are set to see an increase in VAT under new proposals put forwards by the British Chambers of Commerce (BCC).

As part of its monthly budget survey, the BCC discovered that only six per cent of companies are in support of the government's planned increase in National Insurance contributions (NICs) as a method of reducing the UK's fiscal deficit.

Instead, the poll revealed that far more firms would rather see the rate of VAT increased to 18.5 per cent.

VAT currently stands at 17.5 per cent, following last year's reduction to 15 per cent which ended on December 31st 2009.

According to research carried out by the Treasury, an 18.5 per cent VAT rate would earn the government an additional £4.5 billion in revenue, whereas the hike in NICs will contribute £5.1 billion.

"Let's scrap the NICs 'tax on jobs' and offset it with a one per cent VAT increase," said BCC director general David Frost. "It's a tough call, but we have to be realistic about repairing the public finances and promoting recovery."

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