Brussels, 19/02/2009 (Agence Europe) - The European Parliament (EP) has sent the Council a message of support for reduced value added tax (VAT) rates for certain goods and services. With its adoption of the report by Ieke van den Burg (PES, Netherlands) the EP endorsed, with some amendments around the edges, the proposal for a directive currently on the Ecofin Council table. MEPs want to provide greater flexibility to those member states which would like to continue to apply reduced VAT rates to labour intensive services (bicycle repair, cleaning of homes, homecare, hairdressing, etc) after the end of 2010. They back reduced indirect taxation for the whole of the housing sector and for restaurant services. The Czech Presidency is hoping for a unanimous political decision at next month's Ecofin Council.
The Commission's proposals will receive “a clear yes”, said van den Burg during the plenary session debate prior to voting. Referring to the rejection of her draft report by the economic and monetary committee at the start of February (see EUROPE 9833), she expressed surprise at the attitude of the Christian Democrat group which was determined to put down amendments in plenary session. Astrid Lulling (EPP-ED, Luxembourg), on the other hand, criticised the refusal of the Socialists to accept any of her group's amendments. “Errare humanum est, sed persevere diabolicum!” she exclaimed. MEPs adopted amendments authorising permanent reduced VAT rates for the purchase of agricultural machinery and for children's clothing and shoes.
Alcoholic drinks. MEPs, however, voted down the EPP-ED amendment for a reduced VAT rate on alcoholic drinks consumed along with a reduced tax meal. “Restaurant owners will have to apply two different rates,” Lulling said. Taxation Commissioner László Kovács said he was against this amendment for reasons of consistency between VAT rules and excise duties applicable to alcoholic drinks. Olle Schmidt (ALDE, Sweden) also opposed the amendment. When, as for labour-intensive services, a tax measure is targeted, “which is not necessarily the case for alcoholic drinks”, it has to be consolidated, “so we will have tax harmonisation where it is possible,” stated French Socialist Pervenche Berès.
During the debate, many MEPs backed reduced taxation for energy efficient goods, especially in the building sector. “Environmentalists would have liked the Commission specifically to target the Green revolution and low-rate VAT to be extended to all products linked to the Kyoto Agreements, but this is more or less covered by building measures,” said Alain Liepietz (Greens/EFA, France). Helmuth Markov (GUE/NGK, Germany) welcomed the lifting of the German block on this measure in the Council. UK MEPs Jim Allister (non-attached) and John Purvis (EPP-ED) highlighted the small returns of the across-the-board VAT cuts introduced in the United Kingdom at the end of 2008, while backing a large, targeted VAT reduction in certain areas. Mariela Velichkova Baeva (ALDE, Bulgaria) said that the proposal could reduce the underground economy, while Danuté Budreikaité (ALDE, Lithuania) pointed out that her country had abolished reduced VAT rates. (M.B./transl.rt)