The caravan industry may have celebrated when a red-faced George Osborne was forced to announce another u-turn over the caravan tax back in May, but there are fears that the industry will still be damaged by his decision.
Instead of the standard 20 per cent rate of VAT, the Treasury decided to cut the caravan tax to five per cent, which could still have dangerous consequences for businesses.
Last week (June 28th), the Government announced that the new tax on static caravans would come into effect from April 2013, and Hull MP Diana Johnson is concerned that this will still hurt the industry and put jobs at risk.
As many as 2,500 businesses will be hit by the tax, and while it will raise just £5 million for the Treasury, the impact could be wide reaching, the Hull Daily Mail reported.
“The Government is admitting even five per cent VAT on static caravans will still do some damage to demand in the caravan industry and their suppliers,” Ms Johnson told the newspaper.
“We now need to see more research from the industry about the effect on local jobs.”
With the majority of caravan industry jobs located in East Yorkshire, the Labour MP is worried that the region will suffer most as sales are impacted, an opinion backed up by Hull East MP Karl Turner.
