THE Chancellor’s recent ill-informed and mistimed Budget served at least one purpose – to illustrate the UK Government’s lack of authority over Value Added Tax (VAT). It is an important indirect tax that affects all and the Government is not in control of it.
Under EU law, the standard rate of VAT in any EU state cannot be lower than 15 per cent. Each state may have up to two reduced rates of at least five per cent for a restricted list of goods and services. The European Council of Ministers must approve any temporary reduction of VAT.
The final authority lies with the European Court of Justice (ECJ) on matters of interpretation of EU Treaties and not with those whom the UK elect to govern us through our Westminster Parliament.
Hence two aspects of the Budget, VAT on tampons and insulation, had to be deferred to these two EU bodies. Both then gave their approval for the UK Chancellor to make the alterations on VAT affecting the UK.
It is worth remembering that the objective of the EU is as it ever was under the original European Economic Community (the EEC which the UK joined in 1973 as a single trading market); then the EEC became the European Community (EC) on November 1, 1993 under the Maastricht Treaty with the EC morphing into a Union with the Lisbon Treaty in 2009.
This treaty was embedded into the EU as the first of its three “pillars” (the second being a common foreign and security policy and the third being police and judicial co-operation in criminal matters), is ever closer union and harmonisation or governing rules. VAT is an example.
In 1973 VAT replaced the UK’s Purchase Tax (a more straightforward tax to implement and collect being applicable at point of manufacture and at distribution, not point of sale) and additionally Purchase Tax was not applied to repair services and second hand goods.
The European Value Added Tax has directly led to increased costs to the UK consumer and industry.
From: Tony Morris, Lee Lane East, Horsforth, Leeds.
ALLAN Biggin FRA is to be congratulated on his letter (The Yorkshire Post, March 12) on the EU’s shabby accounting. The only valid question to be addressed before the referendum is “would you join, or even remain in a club, which cannot present authentic, accurate audited accounts?”