As we look across the English Channel our European neighbours continue to show a number of initiatives around Covid-19 that the UK could do well to adopt.
The Belgian Government’s Social and Economic Protection Plan includes various measures aimed at helping their hospitality industry through reductions in VAT.
VAT is being reduced from 12% to 6% on meals, and from 21% to 6% for non-alcoholic beverages until the end of 2020.
Calling on the Government to reduce VAT has been repeated many times in recent years.
Reducing VAT justification unprecedented – basic calculations
As Rishi Sunak has been actively pouring money out from Government coffers, to now ask for reduced input to them may seem churlish. But it is worth looking closer and bringing considerations other than VAT input and output into a wider equation.
Above all else Sunak will want to see the UK economy bounce back, he’s banking on it.
With all too many households around the UK strapped for cash, incentives for people to go out and spend would be helpful.
The economy will need to see people out and going about their daily business.
Hospitality businesses need to see those same people spending in restaurants, pubs, and cafes. Price incentives will help, and reducing VAT is an incentive that would be fairly distributed, helping most.
Reducing VAT justification unprecedented – wider considerations
If the economy does bounce back, and reducing VAT helps it to, the benefits would surpass the cost. More people in work paying taxes, less benefits paid to people out of work and greater tax income from businesses being open rather than the alternative.
The finer economic points surrounding increasing or decreasing taxes are many and complex. The current economic climate and the one looming requires drastic actions.
We have seen some already, maybe some more, even temporary ones, could be implemented in these unprecedented times.
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