§ Mr. Lathamasked the Chancellor of the Exchequer what is the latest position regarding the draft proposals of the European Community Commission to phase out zero rating of value added tax; and whether he will give an assurance that any such proposals will be opposed by Her Majesty's Government.
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§ Mr. Bruce-GardyneThe European Community's sixth directive on VAT requires the Council to review zero-rates every five years. The Commission's report represents the first stage in this review, and is not a formal proposal for action. If the Commission decided, after assessing member states' reactions to its report, to put forward such a proposal it would require unanimity in the Council of Ministers in order to put it into effect. The Government have always made it clear that they see zero-rates as an integral part of our VAT system and will take every opportunity to impress this upon the Commission and our Community partners.