FMB calls on government to cut VAT
The Federation of Master Builders (FMB) is calling on the government to cut the rate of VAT in a move it claims will boost the construction sector and the wider economy.Citing independent research by Experian, the FMB says reducing VAT on housing renovation and repair could give the UK economy a £15 billion boost from 2015 to 2020. The reduction could create 95,000 jobs and deliver almost 240,000 tonnes of carbon dioxide savings from 92,000 homes.More than 60 charities, trade associations, business groups and financial institutions are calling on the three main political parties to make the commitment in their 2015 election manifestos.Brian Berry, chief executive of the FMB, said: "A VAT reduction on housing renovation and repair work will empower home owners to contribute to growth, jobs and greener homes without placing a burden on the Treasury. "There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse." He added that the £15 billion of wider economic activity generated would compensate for the fall in government revenue which would be incurred as a result of the reduction.Mr Berry went on to say other EU member states are currently enjoying the benefits a VAT reduction can bring and EU law does not prevent the UK from implementing such a policy.The report, An estimate of the effects of a reduction in the rate of VAT on housing renovation and repair work: 2015 to 2020, claims a large number of construction small and medium-sized enterprises would benefit from a VAT reduction.Its economic models show gains to the Treasury in terms of reduced unemployment benefit payments and extra income tax and National Insurance receipts, which would compensate for the loss to VAT receipts.According to the report, the nation's economy would benefit substantially from a VAT reduction, as for every £1 million of construction output, £2.98 million is generated in the wider economy.Environmental benefits would also be substantial, with increased work on energy efficiency measures helping the UK to meet its carbon emission reduction targets.
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