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Budget- VAT cut unites construction industry

Friday, 17 April 2009 4:42 PM

A cut in VAT for the construction industry is bringing leading organisations together ahead of Wednesday's Budget.

The coalition, including Construction Products Association (CPA), the Federation of Master Builders (FMB), the Royal Institute of British Architects (Riba) and the Royal Institution of Chartered Surveyors (Rics), have written to the Chancellor to argue a VAT cut could "kick start" the British economy.

The groups have said that with 300,000 job losses predicted in the construction industry, the government should take heed of experiments elsewhere in Europe which indicate a VAT cut could create thousands of jobs.

Michael Ankers chief executive of the CPA said: "The Chancellor has a unique opportunity in his Budget to take advantage of the EU decision of 10th March 2009, which allows Member States to reduce VAT on services, and cut the current rate of VAT from 15 to five per cent for all private housing repair and maintenance work."

"The European Construction Industry Federation (FIEC) has shown that the experiment of reduced VAT rates for activities relating to the restoration and maintenance of dwellings in Belgium, Spain, Italy and Portugal created almost 170,000 permanent additional jobs. In France the scheme resulted in a ?500 million net increase in tax yields, disproving the argument that the scheme would burden public finances," Sunand Prasad, president of the RIBA added.

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