FMB criticises treasury over flooding VAT
Tuesday, 8 April 2008 4:51 PM
The Federation of Master Builders (FMB) has criticised the government for "receiving a huge windfall" at the expense of the victims of 2007's flooding.
As many as 11 people died in flood which swept large parts of the Midlands and south Wales in June and July last year - leaving as many as 40,000 families homeless.
A small proportion of these families have been unable to return to their properties a year after the event.
Following the Association of British Insurer's (ABI) final estimate of a bill of £3 billion, the FMB has criticised the government for the funds taken in VAT.
With VAT charged at the full rate of 17.5 per cent on almost all building repair work following the floods, the FMB argues up to £525m could have been generated for the treasury.
According to the ABI the average homeowner paid £30,000 to have their home repaired following the June floods and £40,000 following the floods in July.
This would have meant them paying VAT bills of £5,250 and £7,000 in June and July respectively.
"What message does this send to those people affected by last summer's floods? It is clearly very wrong that the government should be making such large amounts of money out of other people's misery and misfortune," said Brian Berry, director of external affairs, at the FMB.
"The insurance industry has clearly identified that its exposure will be £3 billion with VAT charged at the full rate of 17.5 per cent on almost all building repair work, it is easy to see that the chancellor is going to be receiving a huge windfall."
The FMB is also irate at the £86 million it claims the government has made available to repair the damage.
In response the FMB is partitioning the government, as part of the 'Cut the VAT' coalition - which includes Royal Institution of Chartered Surveyors (RICS), Empty Homes Agency and the National Home Improvement Council - for a reduction of the VAT on building repairs from 17.5 to five per cent.
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