This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
  • Delicious




UK And Ireland Told To End Zero Rate VAT On Children's Clothes

by Ulrika Lomas, Tax-News.com, Brussels

18 July 2003

The European Commissioner for taxation and the internal market, Frits Bolkestein, has called on the governments of Ireland and the United Kingdom to apply VAT (Value Added Tax) to children's clothing and shoes, currently zero-rated, in order to rectify a "clear distortion of the single market".

"To improve the functioning of the internal market we need to ensure a more level playing field for all the Member States, including the new ones, and put an end to distortions arising from the fact that some Member States are allowed to charge reduced rates of VAT in certain sectors while others are not", Bolkestein announced in a recent statement. "Also, a reduction in VAT rates is never passed on in full in consumer prices. Very often it is negligible and temporary," he added.

"I am sure this will be presented by some as a proposal to tax motherhood and apple pie," the Commissioner was recently quoted as observing by the Financial Times, "but the reality is that it is not parents and children who benefit from zero rates. The prices of these items are higher in Britain than in the continent."

According to the European Commission, the aim of current VAT policy is "to seek a balanced approach for the whole of the European Union. This required going beyond a review of the restrictive list of goods and services to which a reduced VAT rate may be applied (Annex H to the Sixth VAT Directive) and examining the various specific derogations available to some Member States, with a view to avoiding potential distortions of competition."

The Commission statement continued: "The proposal also includes appropriate measures for a final decision on the VAT rate applicable to labour-intensive services. It does not call into question the optional nature of reduced VAT rates: no Member State will be obliged to introduce new reduced VAT rates."

The VAT proposals are set to go before EU finance minsters for approval in September. However, they must receive unanimous support from all member states before being passed.

http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1057562478168 http://www.europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/03/1024|0|RAPID&lg=EN;

 

 






Write a comment