FSB backs VAT cut for pubs
The Federation of Small Businesses (FSB) has thrown its support behind the Publican's Morning Advertiser's 'Thrive on Five' campaign to reduce VAT to 5% across the hospitality industry.
According to figures in its quarterly Index, the FSB said that business confidence has fallen dramatically and consumer demand is a large barrier to economic growth, so a VAT cut would encourage people to spend in these areas.
It has called on the Government to follow the lead of other EU countries and cut VAT in the construction and tourism sectors to 5% for a year to help give the economy a real boost.
The Index showed that confidence among hotels, restaurants and bars fell by nine points from +13 to +4 in the first quarter and the FSB said it is extremely worried that the Government's growth plan is failing, and the promises to help small businesses grow have yet to materialise.
By targeting VAT cuts in construction and tourism, the FSB believes that small firms will be able to drive job creation and boost consumer spending — something the Government's growth plan has so far failed to do.
"The economy is still in a fragile state and these figures clearly show that the Government's growth strategy is just not working," said John Walker, national chairman, Federation of Small Businesses.
"In an economy characterised by high unemployment and muted demand, more needs to be done to encourage businesses to take on staff and grow their business so that the recovery can really get back on track.
"We now need the Government's actions to match its rhetoric, and it must finally deliver on actions in its growth strategy.
"We must see a cut in VAT to five per cent in the construction and tourism sectors to boost consumer demand. It is tangible measures like this that will actually help small businesses to be able to grow their businesses and grow the economy."
