According to The Centre for Economics and Business Research, the British Government should take drastic measures to avoid falling into a deflationist pattern, a possibility that is looming in the economic background. Douglas Mc Williams, the CEBR’s chief executive, believes that strong Keynesian measures must be put in place in order to face the global crisis. Of course, this means cutting VAT rate by overcoming the EU’s VAT Directive, which sets a lower limit of 15% for all member states unless ‘certain conditions’ arise.
At the moment, UK rate is fixed at 17.5%, although Britain’s political forces – the Government as well as the Opposition - are talking about cutting taxes for businesses to help soften the impact of the recession. Prime Minister Gordon Brown seems keen to take measures to provide ‘a stimulus to the world economy’, but hasn’t set up an exact plan yet. At the other end of the table, Conservative leader David Cameron is calling on the Government to cut employment taxes by £2.6bn, while the Liberal Democrats are petitioning for income tax reductions.
In this context of challenging economic circumstances and heated debates around cutting taxes, where does your business stand? Online marketplace AssetTrader firmly believes that cutting VAT rate would provide a vital stimulus for those companies who are thinking of upgrading their industrial equipment, but are prevented to do so by growing concerns over Value Added Tax burden. One effective solution might be a tiered VAT rate that encourages SMEs and start-ups to buy used items rather than new. In this way, businesses would be presented with a double advantage: alleviating the effects of the recession by cutting costs, and helping the environment by reducing carbon footprints.
Buying new equipment could cost companies thousands of pounds in storage and depreciating costs, especially when the items go unused for more than 50% of their work span. Besides, recent studies have shown that manufacturing and disposal of new equipment is one of the major contributors to increased CO2 levels in the atmosphere.
CEO Paul Holladay explains: “We feel that some companies may be deterred from purchasing used equipment, even at a reduced cost, because of unknown maintenance needs and expired warranties. By reducing the VAT rate of the purchasing and sale of these items, more businesses will be encouraged to take the green option.
Even if generally considered an environmentally sound and cost-effective practice, until recently the buying and selling of used corporate and industrial assets was seen as a slightly suspect affair. For example: it has always been difficult to trust the broker you want to buy a motor grader from, or the purchaser of your under-used IT equipment. We feel that by bringing the buying and selling of every type of commercial and industrial asset under one roof, and using a vetting process for all buyers and sellers we have provided a legitimate business forum in which many more companies can easily go used rather than new.”
AssetTrader’
http://www.assettrader.co.uk
