Builders' Merchants News

Another call to cut VAT on RMI

Published:  23 November, 2009

TEESIDE: The benefits of a 5% cut in VAT on property repairs would more than compensate for the loss in government revenue, according to new research.

The report, conducted by Teesside University Business School for Repairing Britain Campaign said the cost to the Government of reducing VAT on repairs to 5% would be £2.6bn, but demand for such services could increase by 10% as a result.

Garvis Snook, chief executive of Rok plc and spokesperson for the Repairing Britain campaign said: "We welcome the findings of this report which give validity to our arguments that a change in tax on property repairs could be cash neutral.

"The report supports our belief that a tax cut could keep more people in work at a time of rising unemployment and help the country return to financial stability and growth."

The report said that against the tax loss is the £3.5bn cost to the Exchequer of 300 000 construction workers remaining unemployed throughout 2010.

Based on experience of the shorter and shallower recession of the 1990s, the sector's job losses will result in a future skills shortage and consequent inflationary wage rises as the recovery takes hold, it said.

VAT reduction on repairs will reduce the black economy and allow a better use of the existing stock of buildings to revitalise communities.