Why reduce VAT
The majority of hairdressing salons are labour-intensive small businesses. This means that most of the service is time-related and VAT in the hairdressing business is a tax on the customer rather than a product purchased such as an MP3 player or a computer.
The Customer
VAT pitched at 5% will boost consumer spending which was one of the many findings of a study by the Dutch Hairdressers Association where hairdressing VAT stands at 6%. For every £40 spent excluding VAT, a 5% rate of VAT will result in a £5 saving for the customer compared with the standard 17.5% rate of VAT. This is a significant benefit, putting more cash in customers' pockets to save or to spend as they see fit. It will also result in more skilled hairdressers (see below), improving the quality of the service paid for.
Hairdressers
Less tax on their services will create more demand, leading to more job opportunities and more training development so they do a better job for the customer and have more job security. This was also proven by the Dutch research which noted a significantly positive impact on the number of employees in the hairdressing sector. Total employment in hairdressing increased by 22% from 1997 to 2007 in The Netherlands.
Salon owners
Salon owners will no longer act as tax collectors, a role that conflicts with their reputation as one of the best-liked service providers in the economy. A lower rate of VAT will make them feel that their customers are getting more value for their labour-intensive services instead of giving such a big chunk to the government.
Government
The Dutch findings proved that deeply reduced VAT results in more jobs, more apprentices and improved business which in turn boosts the economy. More businesses that are registered for VAT leads to more responsible salon owners bringing in at least as much VAT overall. There is no cost to the Treasury. This means less trading on the black economy and the creation of a more responsible business environment. So there is everything to gain and nothing to lose.
The Customer
VAT pitched at 5% will boost consumer spending which was one of the many findings of a study by the Dutch Hairdressers Association where hairdressing VAT stands at 6%. For every £40 spent excluding VAT, a 5% rate of VAT will result in a £5 saving for the customer compared with the standard 17.5% rate of VAT. This is a significant benefit, putting more cash in customers' pockets to save or to spend as they see fit. It will also result in more skilled hairdressers (see below), improving the quality of the service paid for.
Hairdressers
Less tax on their services will create more demand, leading to more job opportunities and more training development so they do a better job for the customer and have more job security. This was also proven by the Dutch research which noted a significantly positive impact on the number of employees in the hairdressing sector. Total employment in hairdressing increased by 22% from 1997 to 2007 in The Netherlands.
Salon owners
Salon owners will no longer act as tax collectors, a role that conflicts with their reputation as one of the best-liked service providers in the economy. A lower rate of VAT will make them feel that their customers are getting more value for their labour-intensive services instead of giving such a big chunk to the government.
Government
The Dutch findings proved that deeply reduced VAT results in more jobs, more apprentices and improved business which in turn boosts the economy. More businesses that are registered for VAT leads to more responsible salon owners bringing in at least as much VAT overall. There is no cost to the Treasury. This means less trading on the black economy and the creation of a more responsible business environment. So there is everything to gain and nothing to lose.
Latest News
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Government to consider lowering rate of VAT for salons - March 2009
Government to consider lowering rate of VAT for salons - March 2009