TaxAdministrationResearch group urges slashing VAT to 12.5%

Research group urges slashing VAT to 12.5%

Research group urges government to slash VAT to 12.5pc to prevent dangerous slide towards deflation

The Centre for Economics and
Business Research
(CEBR) is urging the government to slash VAT by five
percentage points, to 12.5% until the end of 2009, to prevent a devastating
recession.

The research group warns Gordon Brown’s bank rescue is starting to unravel.
‘The position in the UK is so bad that it cannot be resolved without Keynesian
measures. Public works would take too long to organise, though they may be part
of the solution for later years. What is needed now is an early tax cut,’
Douglas McWilliams, the CEBR’s chief executive, told The Daily
Telegraph
.

‘We’re very worried about the risk of deflation. There is a severe crisis of
confidence, which means interest rate cuts will have less effect than usual.
Most businesses are battening down the hatches to maximise cash, and we think
they will cut investment by 30% to 40% next year.’

CEBR said that, although the gross cost to the Treasury would be £24bn, the
net cost might be far lower if prevented a devastating recession eating into tax
revenue. The group predicted the budget deficit might reach £110bn in 2009 – or
close to 8% of GDP.

Further reading:

VAT increases is the ‘odds on favourite’ for raising
revenue

Read
The Daily Telegraph story

Related Articles

LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

23h Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

2w Emma Smith, Managing Editor
HMRC issues updated Trusts Registration Service guidance

Administration HMRC issues updated Trusts Registration Service guidance

2w Emma Smith, Managing Editor
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

2m Austin Clark, Reporter
Are you ready for the Trusts Registration Service?

Administration Are you ready for the Trusts Registration Service?

3m Helen Thornley, ATT Technical Officer
Advisers bullish despite Brexit concerns

Accounting Standards Advisers bullish despite Brexit concerns

1y Fraser Simpson, Reporter
Brexit: Five questions accountants should be asking

Accounting Firms Brexit: Five questions accountants should be asking

1y Fraser Simpson, Reporter