Businesses in the waste management industry are bracing themselves for the effect of the Government’s VAT increase from 17.5% to 20%.
The change, which came into effect on 4 January, could see another tough year for companies and consumers as the economy heads out of the recession into VAT increases.
Waste Recycling Group (WRG) general manager Mike Snell said: “All businesses have had a tough 2010 and the increase in VAT this month will not make things any easier as we enter a new year of trading. The higher VAT rate will undoubtedly have an impact on a wide range of costs, fuel oil in particular, as well as other bought-in services .
“WRG will continue to maintain a strong focus on ensuring that such costs remain under control. We would hope that when the time is right, the Government will return the VAT rate to a lower level.”
Sita external affairs director Gev Eduljee added: “It will be interesting to see how customer behaviour changes as a result. We certainly expect to see customers trying to find even more cost-effective ways of disposing of their waste, so hopefully an increased interest in recycling solutions may be one positive effect of the increase.”
The Federation of Small Businesses believes small firms will not be able to absorb the VAT increase unlike bigger firms, which could mean having to pass the cost on to customers, reduce stock levels or find savings elsewhere, with a potential impact on jobs. A large percentage of businesses in the waste and recycling sector are classed as small.