Enter Your E-mail

LITRG’s response to the European Commission’s consultation on VAT reform stresses that the impact of change on consumers and individuals running small businesses must be taken into account.
 

VAT and low-income consumers

VAT is a particularly regressive tax, imposing the highest burdens on people with low, fixed incomes such as many pensioners and those living on state benefits.

LITRG’s short submission in response to the European Commission Green Paper on the future of VAT - ‘Towards a simpler, more robust and efficient VAT system’ highlights two issues.

A single rate of VAT?

First, we are concerned about proposals to remove or minimise reduced rates in favour of a single, standard rate of VAT. Such a move could impact on low-income or vulnerable consumers – for example, disabled people in the UK for whom a zero rate of VAT on certain goods and services is currently available, unless of course alternative support is offered to those affected.

Small businesses – coping with VAT compliance

Our second concern is the possible impact on individuals running small businesses who might struggle with unreasonable VAT compliance burdens imposed in individual Member States.

For example, the requirement in the UK for all VAT taxable persons to submit electronic returns has already caused problems – particularly for disabled people, older people or those operating businesses in remote, rural communities. These could be compounded if the pace of changes which rely on people’s technological ability is not carefully measured and controlled.

Useful links

LITRG’s full response to the consultation can be read on their website