Should Brussels abolish zero-rate VAT for photo album print?

savepete

HMRC had accepted that a "photo book which possesses, as a minimum, several pages, a cover stiffer than its pages and is bound, will qualify for zero-rating as a book". Furthermore, her Majesty’s tax collectors accept that a book is not necessarily there to be read, but can also be designed to be looked at. The tax authorities are thereby overturning the previous rule of a minimum text content of 20% (whatever that means) for a printed photo album to enjoy the same preferential VAT treatment as a novel on paper.

However, in a Combined Nomenclature (used to catalog products for customs, duties and VAT) harmonization ruling issued in December 2015, Brussels has decided that 'photo book print' (in A4 size) is to be classified like photo albums [EUR-Lex - 32015R2254], thereby making it a full rate VAT item or service in all of the European Union, including in those member states currently classifying printed photo albums as books. The photo album ruling brings Austria, Germany and the UK in line with Ireland and the rest of the EU, ending the practice of some British photo labs selling printed photo books at zero or lower-rate VAT to consumers in other EU-countries where local businesses have to compete at the full rate.

Is VAT harmonization right for the functioning of cross-boarder trade in the common market?

Catapa

Countries should end zero rates and charge a minimum VAT rate of at least 5%, even if this is inconvenient for pro-EU politicians in the UK, when it comes to the press’ rage over tax on tampons. Hopefully, the UK government’s willingness to break EU VAT rules in the run-up to the Brexit referendum, will not kill VAT harmonization. In the end, there is always the chance of a Brexit, allowing the European Union to to do what is economically sound and leave it to the British government to do whatever Ukip, the DailyFail or other populists demand.

Generali

I reckon that any VAT rate between 0-100% on this product will make a difference of less than 5/8ths of 0 to the UK's economy.

savepete

This is more about the principle of who is setting VAT-rates vs harmonization (see the so called tampon tax) than about a particular product (photo books, helicopters, cold pasties) or industry (agriculture, construction materials).

CLAPTON

Catapa wrote: »

Countries should end zero rates and charge a minimum VAT rate of at least 5%, even if this is inconvenient for pro-EU politicians in the UK, when it comes to the press’ rage over tax on tampons. Hopefully, the UK government’s willingness to break EU VAT rules in the run-up to the Brexit referendum, will not kill VAT harmonization. In the end, there is always the chance of a Brexit, allowing the European Union to to do what is economically sound and leave it to the British government to do whatever Ukip, the DailyFail or other populists demand.

why is a harmonised VAT rate economically sound?
why is taxing 'good' products like thermal insulation, solar panels etc highly 'economically sound', when it leads to greater energy use and increased global warming?

Linton

CLAPTON wrote: »

why is a harmonised VAT rate economically sound?
why is taxing 'good' products like thermal insulation, solar panels etc highly 'economically sound', when it leads to greater energy use and increased global warming?

Because with any trade agreement these days non-tariff barriers are as, if not more, important than simply removing tariffs. A key part of this is to ensure that individual countries are limited in the things they can do that would, inadvertantly of course, preferentially help home producers. Agreeing these limitations is a major negotiation and the results are likely to be messy, though may well be preferable to having no trade agreement at all.

As to differentiating between good and bad products some people may see this as interfering with the market and so automatically a bad thing to do. However I see no objection in principle with doing this within the limitations of international agreements. But with the agreements within the EU, and then agreements between the EU and the other major economies one could see it would again get a bit messy. With the UK out of the EU and so having far less clout with trade negotiations it could get horrendous.

In practice I suspect that lower VAT rates for particular good things is more for political benefit rather than having a major economic effect.

Catapa

CLAPTON wrote: »

why is a harmonised VAT rate economically sound?
why is taxing 'good' products like thermal insulation, solar panels etc highly 'economically sound', when it leads to greater energy use and increased global warming?

Don't worry CLAPTON, VAT won't lead to global warming ;-)
A uniform VAT-rate would minimise distortions, remove any government meddling over which types of consumption are favoured and focus different parts of the tax and benefit system on what they do best: You simply achieve more with directly targeted incentives for eg insulation.

CLAPTON

Catapa wrote: »

Don't worry CLAPTON, VAT won't lead to global warming ;-)
A uniform VAT-rate would minimise distortions, remove any government meddling over which types of consumption are favoured and focus different parts of the tax and benefit system on what they do best: You simply achieve more with directly targeted incentives for eg insulation.

what distortions are these?
you seem against government 'meddling' but in favour of government 'targetting' (meddling?)

and we don't have directly targetted incentives and we used to have 5% Vat now raised to 20%

you may be a climate change denier but Co2 does lead to more global warming

savepete

Setting VAT rates is government meddling:
- if I buy my daughter expensive trainers, I pay no VAT. If I buy her a bike it's 20%,
- if I buy hot pasties there is 20% VAT, if the pasties are cold its zero,
- if I buy a helicopter its exempt, if I buy a car there is 20% VAT,
- if I buy an energy efficient kettle or vacuum cleaner I pay 20% VAT, if I buy insulation material I won't.
In the UK there are extremely poorly insulated homes, often inhabited by the economically least fortunate members of society. Targeting subsidies at the homes most in need of insulation directly would achieve greater social and environmental benefits than just taking the VAT off.

chewmylegoff

I wish they would stop all this bollox and just charge a flat rate of VAT on absolutely everything and be done with it and get rid of the whole industry of hangers on who argue in courts about whether a Jaffa cake is a biscuit or a cake.

antrobus

chewmylegoff wrote: »

I wish they would stop all this bollox and just charge a flat rate of VAT on absolutely everything and be done with it and get rid of the whole industry of hangers on who argue in courts about whether a Jaffa cake is a biscuit or a cake.

That's the way they do it in New Zealand. And it's the economically correct way to levy a sales tax.

It's first on my list of things to do when I become the first dictator of the United States of Europe.

P.S. And I actually don't care about the VAT treatment of foxin photo books.