Sunday 9 June 2013

EU wants to abolish VAT exemptions

The EU is planning to abolish zero VAT-rated goods and raise VAT on reduced-rate goods.

Currently there is no VAT charged on (amongst others) books, childrens' clothes, water, fresh food, donated items sold by charities, equipment for disabled people, medical equipment, newspapers, personal protective equipment and insurance.

A reduced 5% rate of VAT is charged on things like childrens' car seats, boilers, heating oil, gas, electricity, coal, mobility aids for old people and energy saving materials.

The EU has already banned new VAT exemptions which is why energy saving materials are charged at 5% even though the British government is desperate to convince people to use them.  Charging the full rate of VAT on zero and reduced rated goods will drive up people's shopping bills and reduce their purchasing power.  The EU claims that charging the top rate of VAT on everything will increase revenue to pay down national debt without taxing labour because that costs jobs but if you take money out of peoples' pockets they buy less which also costs jobs.  Putting tax up depresses the economy, the only sustainable answer is to cut spending.