DID YOU KNOW that Britain is one of the
few EC members without VAT on a range of essential items? These
include:
Food (various items in shops)
Books
Public transport fares
Newspapers
Children’s clothing
House purchase
In 1977, the Labour Government caved in
to the EC and agreed that Britain’s zero-rating for these
items was only temporary. (The last VAT review in 1998 maintained
this stay of execution). The Daily Telegraph (22.4.97) reported
that the EC regarded lower-rate VAT on fuel as a temporary step
towards full-rate VAT.
Writing in Taxation (5.3.98), Francesca
Lagerberg ACA wrote that VAT-exempt financial and insurance services
are also at risk. She pointed out how mortgage interest and deposit
accounts might be affected.
THE EC’s PLANS
EC document COM(96)328, produced in July
1996, reveals a lot about the Commission’s plans for VAT
harmonisation
It sees different national exemptions and
rates for VAT as ‘a distortion of competition’
It sees the trend towards more taxation rather than more exemptions
It would look for loopholes where a veto could be bypassed
VAT would be paid into a central fund and redistributed using
an EC formula for ‘consumption’
An EC VAT Committee would be set up with
regulatory powers (Britain would have no veto)
By 1999, the EC would propose more ‘approximation’ of
laws on VAT. (Read ‘harmonisation’.)
It would examine exemptions such as for small firms (Read ‘remove’?)
There would then be a final round of harmonisation of VAT rates.
There would be at least two years for member states to complete
proposed changeovers
A European Commission pamphlet glorifying the EC (obtained in
1996) claimed that harmonisation was a thing of the past, and
that a less intensive ‘approximation’ of rules was now
the vogue! Yet publications dating back to 1986 and 1975 show
that tax harmonisation has permanently been on the agenda!
THE EC’s POWERS
Under the terms of our EC membership, the
Commission can make its own absolute rulings (‘decisions’
or ‘regulations’). Britain does not have a veto over
rulings passed under ‘distortion of competition’ ('Maastricht',
Art. 3(g)).
The abolition of our rights to duty free
shopping shows that the EC is serious about using its powers.
We are moving fast towards being absorbed into "a country
called Europe".
Tough luck on the worst off sections
of society, such as pensioners and the lower-paid!
