HL Deb 11 February 1997 vol 578 c16WA
Lord Pearson of Rannoch

asked Her Majesty's Government:

Whether they will list for United Kingdom goods affected by the adoption of European legislation on VAT, the effect on the rate of VAT for the goods and the date from which the change, if any, may apply.

Lord Mackay of Ardbrecknish

The principal European Community provision on VAT (the Sixth VAT Directive 77/388) establishes a broad framework for rates of tax which may be applied, including a standard rate of not less than 15 per cent.; the option to apply one or two reduced rates (of not less than 5 per cent.) to certain specified items; and lists mandatory exemptions from the tax. The directive also includes certain special provisions, such as those providing for the UK's zero rates. No other EC provisions bearing upon the rate of VAT are immediately in prospect, nor have any prospective changes been agreed. Since all EC VAT matters are subject to unanimity, no changes can be made to any aspect of the existing regime without the UK's agreement.

Lord Pearson of Rannoch

asked Her Majesty's Government:

What European legislation concerning VAT has been, or is in prospect of being, adopted in United Kingdom law, and under what system of voting in which organs of the Community it has been, or may be, adopted.

Lord Mackay of Ardbrecknish

The Sixth VAT Directive (77/388) is the principal European Community (EC) level agreement on VAT. Its provisions, together with those of a number of subsidiary directives dealing with certain specific aspects of the tax, are reflected in UK law (principally in the VAT Act 1994). The legal base for all EC VAT matters is Article 99 of the Treaty establishing the European Community. Unanimity in the relevant Council of Ministers (ECOFIN) is thus required for all legislative measures.

The Commission issued a document in July 1996 (COM 328) (96) final), outlining a programme of suggested changes to the current EC VAT system, but have not yet followed it up with legislative proposals. The current system remains in force automatically in the absence of unanimous agreement to change it. There is, therefore, no question of the UK being forced to agree to any change.