§ Mr. ChopeTo ask the Chancellor of the Exchequer what is the Government's policy towards the proposal of the EU Commission that there should be a three-year trial period during which member states of the EU can impose a 5 per cent. rate of VAT on repairs to domestic housing; and if he will make a statement. [24770]
§ Dawn Primarolo[holding answer 22 January 1998]: The Commission's suggestion that member states should be able to opt to apply a reduced rate experimentally to certain labour-intensive services has yet to be discussed by the ECOFIN Council, or indeed to be presented as a formal legislative proposal. The Government are carefully considering this proposal. There is, though, little evidence yet to convince us of the usefulness of reduced rates of VAT as a means of increasing employment or assisting small businesses.
The UK has a £49,000 registration threshold for VAT, which already allows a small labour-intensive business, such as a builder doing house repairs, to trade legitimately without charging VAT.