EU Proposes Changes to VAT Rates
The press have been covering recent comments from the EU Commission concerning changes to the rate of VAT. For example see Telegraph 28/1/15.
The reports have laid a lot of stress on the Commission comments that the EU may seek to remove the UK zero rates and charge VAT on food and children’s clothing. Theres been rather less stress on the other comments that alternativly the EU might allow remember states more autonomy over setting their own rates. The headlines that ‘EU plan to tax food‘ could equally have been ‘EU plans to allow UK to cut VAT on anything‘ .
It’s clear that if the UK wants to keep its zero rates it can veto any change. It’s also always been the case that getting every member state to agree to any VAT proposal is almost impossible so don’t hold your breath for any changes. But we must hope that some progress is made on reforming the system as there are clearly areas where tax must be updated, such as changing the standard VAT rate applying to electronic books.
In many cases because it’s so hard to get agreement to make changes, the VAT system is a tax that is stuck in the 1970’s. Its a tax that wears flares albeit zero rated ones for less than a 72cm waist.