Chancellor urged to consider small businesses

Chancellor George Osborne is being urged to consider a sunset clause to help small businesses such as pubs cope with any rise in VAT.

The Federation of Small Businesses (FSB) made the plea ahead of tomorrow's emergency Budget.

It is anticipated that Osborne will put VAT up to 20 per cent to help boost government coffers.

But the FSB is urging the coalition government to "think small first" and allow businesses a changeover period to help cope with the administrative cost the change will bring.

According to the FSB the move to reduce VAT to 15 per cent in 2008 cost the average small business £1,500 in administration.

John Walker, FSB national chairman, said: "While the FSB does not want to see taxes increased we understand that reducing the budget deficit is a key priority.

"The Chancellor must use the Budget to set out his pro-business credentials and offer something to stimulate growth. Private sector growth is the best method of cutting the deficit, keeping taxes low and absorbing the staff that will lose jobs in this round of budget cuts.

"It is imperative that any changes to Capital Gains Tax or VAT go hand-in-hand with an ambitious plan for helping economic growth through allowing small firms to employ, grow, invest and innovate."

Meanwhile CAMRA has reiterated concerns about the cost to pub customers if alcohol duty is hiked five per cent on top of the VAT rise. It believes such a move will cost pub-goers £100m by the end of the year.

CAMRA chief executive Mike Benner said: "UK beer drinkers have already been singled out for some of the most whirlwind tax hikes in modern history, with beer excise duty rates alone increasing by a whopping 25 per cent in the last two and a half years.

"We now issue a plea to this new coalition government to help re-write these devastating blows to the UK pub industry in the last couple of years, and at the very least offset any potential VAT increase with compensatory measures for beer duty."