VAT rise 'will be passed on by SMEs'
Commercial insurance
24th June 2010
In order to handle the proposed increase in VAT to 20 per cent, small and medium-sized enterprises (SMEs) will be forced to pass it on to consumers.
This is the view expressed by the Federation of Small Businesses (FSB), which suggested such companies will not be able to absorb the rise themselves and will have to raise prices as a result.
According to a spokeswoman for the organisation, the majority of businesses back efforts to cut the deficit, but measures are needed to offset them in order to encourage economic growth and job creation.
"Big firms have the cash flow available to not pass on all of the increases to their customers, which small firms do not have - especially in the current economic situation," she stated.
The FSB representative was commenting on the government's emergency Budget, announced by chancellor George Osborne, in which he stated VAT will increase from 17.5 per cent from January 4th.
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