The International Monetary Fund (IMF) is reported to have suggested yesterday that the UK should consider a cut in VAT or payroll taxes (NIC) if the economic situation in the UK fails to improve.
It is perhaps ironic that, alongside many other EC territories, the UK has increased its VAT rate (albeit after a temporary cut) whilst the cumulative takeup of its flagship Regional NIC Holiday for New Businesses was a woeful 11,000 to 12,000 at last count - see Peter Arrowsmith's NIC Update - February 2012.
Whilst Mme Lagarde et al may have been thinking of a cut to the main rate of VAT, there are a number of industries in the UK that might consider renewing calls for targeted cuts in specific sectors.
The EC has for some years allowed member states independently to cut rates in "Labour Intensive Services", a term which cover a wide range of supplies, such as those in the construction, renovation and maintenance of housing and homes. The slump in the construction sector was widely reported just a few weeks ago as being a major factor in the UK's formal return to 'recession'.
France, Germany, Belgium and Ireland have also cut the VAT rate applicable to catering in restaurants, hotels and the like.
But calls for similar cuts in the UK have, thus far, fallen on deaf ears - and not just those of the current government. Perhaps it is time for renewed discussion?
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