A reduced VAT, a new suspension of activity rates and the creation of an infrastructure investment fund for rural towns and villages are among the proposals published by local trade groups to deal with the impact of the cost of living crisis on the business sector.
his action plan, Perfect Storm – The Cost of Doing Businesswas released on August 23 by NI Retail, Hospitality Ulster, NI Takeaway Association and the Northern Ireland Chambers of Commerce.
As discretionary income falls as inflation rises, businesses face falling trade, as well as rising energy and food and beverage bills and a labor crisis ‘work.
In a joint statement, the leaders of the 15 business organizations releasing the plan said: “We are at a critical time as a perfect storm of factors is wreaking havoc on the retail and hospitality sectors and could see thousands of businesses at risk over the next few months if no action is taken.
“Running energy bills out of control, labor shortages, inflation, National Insurance increases and sky-high corporate rates – the highest in the UK – are jeopardizing the business climate in Northern Ireland.
“The fears that many will simply sink in the next few months without government assistance are keenly felt and we can no longer continue down this path of destruction.
“We are driving customers away because we have to raise prices to keep pace with these rising costs, which therefore has a negative impact on trade and consumer confidence.
“Intervention is required from the UK government, along with limited powers from NI executive ministers, to avert the worst of this crisis for business owners and provide tangible support and resources that could keep the business viable.
“Our plan offers achievable and tangible solutions that would support business from day one. Actions including a reduction in the VAT rate to 17% to encourage more households to spend on the high street; increased financial assistance through the block grant to ease the cost of business fares, and the implementation of the NI High Street task force report will help bring operations back to viable commercial levels.
“We call on both governments to consider our proposals and engage with the business community on how best to implement urgent actions that can ease these crippling pressures. It will support both businesses and consumers in these most pressing times.
The actions described in the plan include:
- Reduction of VAT to 17%.
- Reinstate the reduced rate of VAT on hospitality expenses applied during the pandemic to support businesses that depend on discretionary income and tourism expenditure.
- Reinstate the business rate holiday introduced in the pandemic, which ended in July 2022, until April 2023.
- Reform the UK-wide business pricing system to ensure online and out-of-town businesses pay the same rate as high street businesses.
- UK government support for devolved nations to reduce business tariffs by providing increased financial support through block grants.
- Removal of VAT from energy bills to reduce energy costs.
- The Northern Ireland Executive will establish a Rural Towns and Villages Infrastructure Investment Fund to ensure that small and medium-sized towns and villages are supported during the economic crisis.
The action plan was co-designed by Retail NI, Hospitality Ulster, Londonderry Chamber of Commerce, Bangor Chamber of Commerce, Ballycastle Chamber of Commerce, Ballymena Chamber of Commerce, Banbridge Chamber of Commerce, Belfast Chamber of Commerce, Causeway Chamber of Commerce, Lisburn Chamber of Commerce, NI Takeaway Association, Newry Chamber of Commerce, Newtownards Chamber of Commerce, Omagh Chamber of Commerce and Portadown Chamber of Commerce.