Labour MEPs: Ministers must stop dithering and abolish VAT on tampons, household fuel and other key products

Ministers must stop dithering and abolish VAT on sanitary products, household heating bills and other key products, Labour MEPs warned as the European Parliament today voted for a report backing proposals for a new zero VAT rate for goods and services that have a positive social benefit.

The proposals aim to amend the VAT Directive and reform the rules by which EU countries set VAT rates, giving them greater flexibility. The new rules would enable all national governments to apply a reduced rate between five and zero per cent for goods and services that have positive impacts, with clear cultural, social, or environmental benefits, alongside a new negative list of items to which reduced rates cannot be applied.

The European Parliament today also backed a report proposing measures to reduce cross-border VAT fraud that will save businesses €1 billion. Presently, large-scale VAT fraud costs EU countries €50 billion a year.

Neena Gill MEP, member of the European Parliament economic and monetary affairs committee, said:

“These new proposals to tackle VAT fraud will reduce the compliance costs of business by up to €1 billion, and it is vital EU governments approve and implement them. Large scale VAT fraud results in €50 billion being lost from national budgets each year because of the complexities in applying differing rules. This is money that could have been spent on housing, schools and healthcare in Britain and throughout the EU.

“We also welcome the proposals to enable EU countries to abolish VAT on key items. This is hugely important in the campaign to end the ‘tampon tax’ – ending VAT on sanitary products is a key social measure which fights poverty and one the European Parliament has prioritised, and it is vital Council approves these new rules as soon as possible. The Tory government must stop blaming the EU, back these proposals and end the tampon tax.”

Alex Mayer MEP, member of the European Parliament economic and monetary affairs committee, said:

“Ministers, especially the UK Tory government, must back the proposals for a new zero-rating of VAT when they return to Council. The abolition of VAT on sanitary products is long overdue, and national politicians, including all the Brexiters in Britain, can no longer hide behind the tiresome, cliched ‘Brussels stops us doing it’ excuse – it is ministers who have held back progress; they must stop dithering and follow the European Parliament’s lead.

“And it’s not just tampons, under the proposed new rules, governments will also have the power to abolish VAT on household fuel bills – but will the Tories actually do it? In government their record is one of hiking up the rate, while it is Labour that has consistently sought to cut it. This VAT revolution has the potential to bring down bills for millions of Britons – but only if the Tories give up their value unadded addiction to VATting the poor.”

The proposals on zero-rating of VAT on key products will go back to Council this autumn.