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Tag ‘VAT’

Express’s “EU £2600 tax bombshell” story completely wrong

Monday, June 20th, 2016
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Rating: 4.5/5 (58 votes cast)

Changes to EU VAT rules require a unanimous agreement by all Member States. That is written in black and white in the EU Treaties, which set out and limit the powers the EU has – and also make very clear that the final say on all big political decisions rests with elected ministers and MEPs, not “Brussels” or “faceless bureaucrats”.

The Treaties themselves are drawn up by – and can only be changed by – unanimous agreement of the Member States.

In other words the UK has a veto both on any changes to VAT rules AND on any changes to the way the EU takes decisions in that area.

So despite the various fulminations quoted in the article, the suggestion in the Daily Express on 20 June that “Brussels” could force the UK to raise VAT rates and cause “a £2600 tax bombshell” is completely factually wrong.

Where there IS agreement that the rules will change is that the possibility to zero rate sanitary products will be introduced- EU leaders made that clear at their summit on 17-18 March.

The rationale for having such VAT rules – agreed by all Member States – is that rates that differed too widely within the single market would increase red tape and costs for business and mean consumers paying more for goods and services.

Sun calls us “Euro VAT prats” – but trims the facts

Sunday, June 9th, 2013
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The Sun on Sunday likes to print an anti-EU story most weeks. This week it has picked up on the European Commission’s proposed economic policy recommendations for the UK, issued on 29 May – so not exactly breaking news and certainly not an “exclusive” as it was labelled, given that many other media have written about the recommendations.

Here is the story, headlined “Euro VAT prats”.

And here is the response we  sent to the Sun’s website at about 9h30 on Sunday. We received an automatic acknowledgment, though our response does not seem to have appeared.

“First, these are recommendations, not demands.

Second although this is deliberately omitted from the article with its childish headline, they include many things the Sun loudly supports, like increasing incentives to come off benefits and get into work.

As the piece does mention, improving the UK’s childcare and transport are also crucial to jobs and this has to be paid for somehow at a time of massive debt.

Thirdly, the recommendation does not say that ALL lower VAT rates should be removed.

Fourth, independent UK analysts have said broadening the base for VAT could raise £3bn even allowing for measures to help the poorest, which the EC also recommends – so this could move the burden of the debt from poor to rich, which the Sun also usually supports.

All in all this article does not paint a full or fair picture, which is no surprise in tabloid coverage of the EU.”

We should perhaps have added that these Commission recommendations will now be discussed, perhaps amended, and then agreed by all EU heads of state and government, including the UK Prime Minister. There will be a full debate on the recommendations for all countries at the next EU summit on 27-28 June. So far from being some kind of Brussels “demand”, these recommendations are input into a debate where the UK has a strong voice. And – as we told the Sun, but they did not tell readers – they are not binding on the UK even at that stage.

Letter to Daily Mail on nettle beer

Friday, February 18th, 2011
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Dear Sirs

Whether or not an alcoholic drink made from stinging nettles is classified as a beer is not the question, “Family brewery facing axe as EU says your nettle beer’s not a beer”, 13 February 2011. The issue here is the UK authorities have decided not to grant a reduced VAT rate to this nettle beer in the same way as they do for cider.

Yours faithfully

Jonathan Scheele
Head of European Commission Representation in the UK

Remembrance Day poppies to face VAT charge

Monday, November 10th, 2003
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EU move threatens Poppy Appeal with a £500,000 tax bill
Tax plans by the European Commission could leave the Royal British legion facing a big VAT bill for Remembrance Day poppies, it emerged today
(Evening Standard, 10 November 2003, page 6)

EU to tax our poppies
Old soldiers were outraged last night over EU plans to tax Remembrance Day poppies.  The Royal British Legion’s annual appeal stands to lose more than £1/2million if the move goes ahead.  Brussels wants to slap VAT on the supply of all goods and services, even those from charities. 
(The Sun, 11 November 2003, page 22)

Even Remembrance Day poppies are fair game for a euromyth. No VAT threat exists to the Royal British Legion’s Poppy Appeal.  The European Commission has introduced new proposals to simplify the use of VAT across the EU.   Under these plans, however, a zero rate may still be applied to “the supply of goods and services by organisations recognised as charities by member states.” The work of the Royal British Legion in selling Remembrance Day poppies will not be affected.

Churches pay full VAT

Tuesday, September 9th, 2003
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REDUCED RATE OF FACTS

EU bars move to cut Church VAT
The Church of England faces soaring repair bills to its churches after the European Commission rejected government proposals to cut VAT.  To the dismay of church leaders, the commission has recommended that Churches should pay the full 17.5 per cent on repairs to listed buildings used as places of worship. Gordon Brown, the Chancellor, has argued that religious organisations should pay a reduced rate of five per cent.  Since 2001 the Treasury has been granting the Churches millions of pounds to make up the difference. 
(The Daily Telegraph, 9 September 2003, page 4)

Under the Listed Places of Worship Grant Scheme, the UK government provides financial support to churches that have had to undertake repairs.   This allows churches to reclaim 12.5% of the cost of repairs, in effect reducing VAT to 5%.    The scheme runs “very successfully” according to the Church of England.  It ensures churches receive the full financial benefit.
In July of this year the European Commission, following consultation with the Member States, put forward its new proposals for the areas where a reduced rate of VAT could be applied in Member States i.e. what goods and services could be subject to a lower rate.  Church repairs were not among them, as the Commission believes that, in this area, member states have more appropriate means to finance church repairs.   Amongst other methods, these may take the form of direct subsidies or, in the case of the UK’s existing scheme, grants.   There is no guarantee that a lower rate of VAT on church repairs will be fully reflected in lower bills for churches.

British power over VAT to be abolished

Sunday, March 19th, 2000
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Eurocrats want to slap VAT on kiddies’ clothes
VAT will be slapped on the price of baby clothes, newspapers, books and some foods under plans unveiled by Brussels last night.  EU chiefs want all member states to have the same tax levels for everything…And they plan to scrap Britain’s right to vary it.  That means EU laws could be foisted on us if a majority of countries backed them.
(The Sun, page 2, 15 March 2000)

Blair faces EU ambush over tax harmonisation
Tony Blair has become the victim of a political ambush on the eve of a European Union summit…by moves to abolish Britain’s national veto in key areas of taxation, VAT and social security policy.
(The Sunday Telegraph, page 2, 19 March 2000)

Despite the obvious delight of the sceptic press, there was no “ambush” and there is no proposal to “slap” the same tax levels on everything.  A contribution from the Commission to the Inter-Governmental Conference proposes that Qualified Majority Voting become the norm for future decisions on VAT, in particular those designed to simplify the present outdated system and adapt it to more recent trading realities, such as electronic commerce.  All Member States would have to agree to such a change, so nothing will be “foisted” on anyone.
To assume QMV will mean harmonisation is also misleading.  Even under QMV, the EU does not simply ride roughshod over individual Member States’ vital interests.  Nor would the UK be alone.  Other Member States, who also have zero or reduced VAT rates on some products, would have similar interests.

Euro tax on kids’ clothes – secret VAT stitch-up revealed

Monday, November 30th, 1998
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The price of children’s clothes will soar if Britain accepts that VAT will be slapped on them, as well as on food. Brussels will bulldoze us into a deal which also means small firms, tradesmen and self-employed will no longer be VAT exempt.
(The Sun, 30 November 1998, page 1)

“Brussels” cannot “bulldoze” EU taxation policy. Proposals from the Commission can only be adapted if Ministers from all fifteen EU Member States including the UK agree. There are no proposals to remove Britain’s zero VAT rating on food, children’s clothes, books and newspapers. The UK government could veto any such move.

Vat on Books and Newspapers

Wednesday, March 10th, 1993
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Myth: Thanks to an EC directive, the UK Government is obliged to abolish the zero rate of VAT on books and newspapers at once.

Response: This is untrue. The relevant directive  permits those Member States that have implemented a zero VAT rate on specific products before 1.1.1991 to maintain that rate from 1.1.1993 for a period of four years.
Therefore, if the UK or any other Member State were to decide to abolish the rate now, it does so of its own initiative.

(*) – Directive 92/77/EEC

EC in the UK

Check the EC Representation in the UK website

Please note that all statements in all entries were correct on the date of publication given. However, older archived posts are not systematically updated in the light of later developments, for example changes to EU law.

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