IoD opposes European VAT proposals

A PROPOSAL BY the European Commission to eliminate certain reduced rates of VAT has been attacked by the Institute of Directors.

The EC’s green paper on the future of VAT proposed the idea of regulation being decided by majority voting, thereby withdrawing the UK’s veto, and standardisation of administrative rules, the VAT threshold and reduced rates, such as the zero rate on children’s clothing in the UK

The IoD said that the advantages of these measures would be “outweighed by the disadvantages of preventing elected governments from adapting VAT to suit the circumstances of their own countries”.

Richard Baron, head of taxation at the IoD, said: “It is sensible for the commission to stand back and take a long, hard look at the way in which VAT operates. It is a massive burden on businesses, and prone to fraud, so improvements are always welcome.

“But we must beware of any assault on national tax powers, or of any tendency to assume that the man in Brussels knows best. We hope that the UK government will resist many of these proposals.”

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