MANUFACTURING and industrial bosses would overwhelmingly prefer a Vat rise to any other tax increase in the 22 June budget, according to accountant KPMG.
A survey of 202 executives found 61 per cent saw a Vat hike as the lesser of several taxation evils, with a higher levy on national insurance viewed as the least favourable outcome. A rise in corporation tax was also deeply unpopular with respondents.
Around 90 per cent of business leaders polled by KPMG came from the manufacturing and industrial sectors, while only 10 per cent came from the retail and financial services sectors which would be more vulnerable to the effects of a Vat hike.
KPMG head of national markets Malcolm Edge said: “To a certain extent it’s a wash-through for companies operating in a predominantly business-to-business environment. However, for those operating in more business-to-consumer markets, it can be far more significant as increases in Vat are either passed on to the consumer by putting end prices up, or absorbed by suppliers.”
KPMG called on the coalition government to help business by extending corporate tax credits.