VAT cut a 'burden' for one-fifth of businesses

Date: 16th February 2009

The government's cut in the rate of VAT has been labelled as a "burden" by one-fifth of British businesses.

That's according to the British Chambers of Commerce's (BCC) latest business survey, which also discovered that 76 per cent of firms felt the 2.5 percentage point cut made no difference whatsoever.

The poll showed bad news elsewhere too, as almost a third of companies suggested that they would be looking to reduce working hours over the next three months.

Economic adviser to the BCC, Steve Hughes, said: "Some of the government's initiatives have been gratefully received, but the £12.5 billion VAT cut ... would clearly have been better spent elsewhere."

He added that April's budget announcement "must include measures to ease cashflow difficulties", such as cuts in national insurance and business taxation.

Earlier this month, a similar survey from the Federation of Small Businesses found that 97 per cent of firms had not felt the effect of the VAT reduction.