§ Lord Tebbitasked Her Majesty's Government:
Further to the Written Answer by the Lord McIntosh of Haringey on 18 February (WA 83) concerning the freedom of the United Kingdom over VAT coverage and rates, whether Parliament is (a) free to extend the coverage of the zero rate of VAT; (b) to reduce the coverage of VAT; (c) to reduce the main rate to 10 per cent; and (d) to reduce the lower rate to 2.5 per cent. [HL1388]
78WA
§ Lord McIntosh of HaringeyAs I explained in my previous answer on 18 February (WA 83), the VAT regimes of all EC member states, including the United Kingdom, have operated within the framework provided by the European Community's Sixth VAT Directive for the last 22 years. This means that the UK Parliament: (a) can make marginal adjustments to existing VAT zero rates, but cannot introduce new ones, or significantly extend those we already have; (b) can make marginal reductions in the coverage of VAT; (c) will not be able to reduce the standard rate of VAT below 15 per cent. when the proposed directive renewing the provision on the minimum EC standard rate of VAT has been approved; and (d) cannot introduce a reduced VAT rate of less than 5 per cent.