Calls made for extension of VAT cut

Date: 24th July 2009

A newspaper has launched a campaign aimed at persuading the government to extend its VAT reduction for longer.

The Daily Telegraph newspaper has claimed the backing of business leaders and politicians, who agree that keeping the tax at the reduced rate will promote economic recovery.

Chancellor of the exchequer Alistair Darling originally introduced the taxation cut - taking VAT down from 17.5 per cent to 15 per cent - towards the end of last year.

The move allowed consumers to save tax on purchases - thereby theoretically providing a boost to retail sales.

However, the tax is scheduled to go back to its previous rate in January 2010.

Sir Stuart Rose, chairman of Marks & Spencer, said that extending the deadline would help to protect sales for businesses during the crucial Christmas and January sales period.

"We all want to be able to focus on delivering a fantastic Christmas and New Year for our customers, not on administration," he told the newspaper.

"This will be an unwelcome distraction and I urge the Government to delay until mid-January at least."

Peter Luff, Conservative chairman of the business and enterprise select committee, added: "I was against the cut in the first place and it should … never have been made.

"But if you are going to do something like this, you need to do it well and introducing it at the time of January sales would be the wrong time."