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Saving enterprises and jobs
Not increasing fiscal burdens and the level of VAT, or even further reducing it, saves enterprises and thus jobs in the
economy. Due to the fragmented structure of the industry with the vast majority of micro enterprises operating on a
highly competitive market, additional fiscal burdens can force enterprises not to reflect these burdens in the prices.
This can bring them in financial difficulties, resulting in the closure of businesses and thus to the loss of jobs.
For example in
France
, following the VAT reduction for restaurant services in 2009, the French National Institute of
Statistics and Economic studies estimated that the number of bankruptcies in the sector decreased by 17%, thus
saving 18.000 enterprises and 30.000 jobs.
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Another example is
Sweden
, where following the VAT reduction of restaurant services in 2012, the evolution of the
turnover of the restaurant industry decoupled from the one of comparable industries. While until 2011 evolution of
turnover was very similar in the two groups, the VAT reduction contributed to an additional increase of the turnover
by 5,6%. A similar evolution can be seen when regarding the net-entry figures to the market. A positive effect of 1,6
percentage points compared to the similar control industries could be observed.
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HOTREC - Report on the benefits of low VAT on job creation and competitiveness in the European Union