Lancashire expert expects Chancellor to cut VAT in his next budget update
A Lancashire business expert has said a VAT cut may be one of the measures taken by Chancellor Rishi Sunak in his summer update.
Jonathan Main from MHA Moore and Smalley said the Chancellor’s expected budget update belived to be due this week should be used as the first step in moving the nation forward with a focus on
He said: "Some are calling this an emergency budget; others just a summer spending update from the chancellor. Without government giving us any firm information, or even confirming a date, we don’t know how it will play out.
"However, to me it is shaping up to be essentially a second coronavirus budget. I’ve lost count of the number of financial statements we’ve had since March and it’s easy to forget just how much change we’ve already seen.
"Hot on the heels of the prime minister’s ‘Build, Build, Build’ infrastructure announcements last week, I think this statement will be about giving people an incentive to spend money.
"To go out and shop, to invest in their properties, and to book holidays in the UK – a spend, spend, spend message."
He said to that end he would not be surprised if we were to see the first VAT rate reduction since 2008. He said it would be important to give people spending confidence, because that would be one way we can get the economy moving again.
He said: "If the chancellor did cut VAT, I could see both a cut to the headline rate, but also a further rate cut, to perhaps as low as 5 per cent, to support certain sectors that have been hardest hit, such as hospitality, leisure and tourism. Cutting the rate to such lows, for example six months, is similar to what Germany has done.
"I think any other major tax changes will probably wait until the autumn, once the dust settles on the furloughed workers scheme.
"Elsewhere, we may see some reductions to customs duties, such as import tariffs, to help manufacturers with the cost of raw materials, as well as further bringing down the cost of finished goods for consumers. However, this is a balancing act because it can’t be at the expense of UK companies and producers who may lose out in such a scenario.
"For me, this budget, if that’s what it ends up being, has got to be more than just standing up and cutting the rate of VAT.
"I believe one huge opportunity for the chancellor on the back of the lockdown is to focus on climate change and supporting the environment.
With the strong community of scientific, research and development businesses we have on these shores, is there a chance to make the UK Europe’s green energy and environmental hub?
"Pushing those innovative companies forward through investment and new tax incentives could really support job creation in the environmental sector and make us a world leader. Over to you Mr Chancellor."