VAT Rates

Other than that this proposal comes from Brussels there’s not really all that much wrong with it:

Britain was on a collision course with Brussels last night as fears
grew of a new European Union push to end the right to exempt children’s
clothes, newspapers and books from VAT.

Wider tax bases with lower rates are generally though to be preferable.

The Treasury said the exemption was worth more than £28 billion to UK
households each year and saved low income households four per cent of
their annual spending.

No, I’m not going to bother looking it up but that would appear to be a sufficient sum to reduce the VAT rate to 15% (the lowest permissible level).

EU countries must apply a general VAT rate of between
15 and 25 per cent, with lower rates of not less than five per cent on
a limited range of goods, usually essential or local services.

The UK applies the lowest rate on domestic fuel and power.

That’s the rate that has to go though. Domestic emissions are a significant part of the UK’s contribution to climate change so that lower rate really is an absurdity.

Indeed, I would argue that it’s a litmus test. Any politician, campaigner or political party who is not arguing that domestic fuel and power should pay the full VAT rate simply isn’t being serious about the whole affair.

As far as I’m aware, no politicians are so arguing, ergo, none are in fact serious.

In

3 responses

  1. Mark Wadsworth Avatar
    Mark Wadsworth

    “the exemption was worth more than £28 billion”. Does anybody believe this for a second? Do we spend more than a tenth of GDP on children’s clothes, newspapers and books?
    The lowest permissible VAT rate is in fact zero, but we’d have to leave the EU first.
    Good point on domestic fuel.

  2. So how is paying more money for the little bit of fuel that people can afford in order not to freeze(etc) going to help the planet? They still need to have the heating on, and most elderly already only heat one room. For as long as there are humans, there will be pollution…

  3. Imli, that’s easy – stick full VAT on domestic fuel and then dish out the proceeds per capita as a universal benefit. Those who use less than the average amount of domestic fuel will be BETTER OFF, and those that use more will be worse off.

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