West Cornwall MP Derek Thomas has broadly welcomed the Chancellor’s Spring Statement and, in particular, is encouraged by his announcement of a consultation on the VAT threshold.
“As well as the healthy economic picture that the Chancellor has been able to paint, with the economy set to grow more strongly than previously thought and with the National Debt beginning to fall, I very much welcome the fact that the Chancellor is looking at the level of the VAT threshold,” said Mr Thomas.
“I have lobbied Government over the past three years on this issue and I therefore welcome his announcement of a consultation on how the current threshold affects business.
“I have consistently argued that the threshold should be increased from its current rate of £83,000 to around £120,000 to encourage small businesses.
“The current system is having a harmful impact on the economy of West Cornwall and the Isles of Scilly as it is helping to contribute to periods of economic vacuum.
“Many of our smaller businesses in West Cornwall are heavily reliant on tourism and what they are doing is closing down or scaling back their business during the off-season to remain competitive and so avoid the administration associated with VAT.
“Unfortunately, this has a detrimental impact on the West Cornwall economy by compressing the tourist season into a few short months; it also affects employment opportunities for workers and reduces the tax the Government can collect through PAYE.
“Raising the tax threshold would create an incentive for the owners of West Cornwall’s small tourism businesses to open for longer periods each year which would help to put more money into our economy, benefitting the high streets in towns like Penzance, St Ives and Helston – I will be urging all our business owners to take part in this consultation.”
Mr Thomas also welcomed the fact that the Chancellor has brought forward the next Business Rates Revaluation by a year to 2021 to ensure more accurate bills but still maintains that the tax should be completely overhauled.
Last October, in a Westminster debate, he argued: “The Government needs to scrap the system of business rates and develop a fresh solution, injecting fairness into the tax system for small businesses and taking into account the growth of online shopping and supermarket home delivery services.
“Structurally there are many things wrong with business rates. The tax bears little or no relation to underlying profits and the way it is calculated is arbitrary.”