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BRC warns Government against increasing VAT

The British Retail Consortium has called on the Government to focus on public spending cuts rather than tax rises in order to tackle the deficit, reiterating its belief that VAT should not be increased.

BRC director general Stephen Robertson said: “The sheer size of the deficit means action must be taken, but the response mustn’t harm the fragile recovery.  It’s the right approach to focus on public spending cuts, rather than tax increases. But the Government mustn’t risk cutting too quickly.

“VAT shouldn’t be increased as it would have negative impacts on retailing and the wider economy. Zero-rated items, such as food, books and children’s clothing, shouldn’t have VAT applied to them as it would hit the most vulnerable members of society the hardest.”

In its Budget submission, the BRC said it supported the Government’s aim for an 80:20 split in public cuts versus tax increases.

The BRC also added that halving the deficit over four years “strikes the best balance” between the “need to reduce the deficit in the short-term and support strong economic growth in the long-term”.

Robertson said: “The Government must make long-term decisions that result in a consistent and predictable business environment – this will encourage investment.”

The BRC also called for future increases in the National Minimum Wage to be “no higher than average earnings in the wider economy”.

Robertson added:  “Retailing is the UK’s largest private sector employer with nearly three million people working in the industry. Placing damaging new costs onto retailers, big and small, will hamper their ability to maximise their contribution to the recovery. The Chancellor must help retailers continue to maintain and create jobs.”

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