MORE than 70 per cent of small businesses expect the VAT hike to have a negative impact on their business, according to a member survey by Federation of Small Businesses (FSB).
A further 52 per cent expect to increase prices, 45 per cent expect a fall in turnover, and 36 per cent expect a loss of customers as a result.
Chancellor George Osborne said the rise was here to stay as it was a change to the tax system to deal with the structural deficit.
The FSB is urging the chancellor to review the increase when the deficit has been significantly reduced and to return it to 17.5 per cent.
Small firms will be hit hard by the rise in VAT as, unlike big businesses, they can't absorb the increase, said the FSB.
This will mean that small firms will have to pass the full cost on to customers, reduce stock levels or find cost savings elsewhere – potentially costing jobs and undermining the private sector-led recovery.
Karl Sirrell, regional chairman of the Federation of Small Businesses, said what should have been a busy time for small firms was hampered by heavy snowfall and severe weather.
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