Britain could drop VAT on sanitary products, says EU

Britain could be allowed to exempt women’s sanitary products from VAT under proposals being considered by the European Commission which would give member states greater powers over sales tax.

Eurosceptic Conservatives have joined Scottish nationalists to press for the UK to be allowed to cut the VAT rate on sanitary products to zero from the present rate of 5 per cent, the lowest permissible under the bloc’s rules.

Frans Timmermans, who is also commissioner for “better regulation”, said that there would be a major review of European value added tax next year.

That will consider whether states could have greater powers over the VAT rates on specific products. Members states would have the “leverage” to raise specific concerns, for example over women’s sanitary products.



“It would be perfectly reasonable for Britain to ask for that,” he told the BBC’s Today programme. “It will be part of the discussions.” Tory MPs have been up in arms this week over the fact that Britain cannot cut the rate of VAT on women’s sanitary products from the current 5 per cent, the lowest level permitted under EU rules.

Most goods attract a VAT rate of 20 per cent in the UK. The esoteric issue has become a lightning rod for wider discontent among eurosceptic members of the Conservative party, many of whom are sympathetic to the idea of the UK leaving the EU.

David Gauke, Treasury minister, promised this week to raise the issue with the European Commission after coming under pressure from Tory eurosceptics and campaigners from other parties, including Caroline Lucas of the Green Party and Paula Sherriff of Labour.

They want sanitary products to join the list of “essential” goods on which VAT is not charged. This includes food, razors and children’s clothes, as well as cremations and incontinence aids. The government narrowly avoided a Commons defeat on the issue when an amendment to the finance bill was defeated by 305 to 287 votes.

Mr Gauke said the government sympathised with the cross-party campaign, which has been running for many years. Mr Timmermans pointed out that the UK had never asked for an exemption on sanitary products in the past. By contrast Ireland had done so and therefore charged no VAT on them as a result.

A change in the rules would require a proposal from the commission and unanimity among the EU’s 28 states. French MPs recently rejected a budget motion to cut the rate of VAT on sanitary products in France from 20 to 5.5 per cent. David Cameron was on Wednesday set to meet Nordic and Baltic leaders in Iceland at a gathering of the Northern Future Forum.

The UK prime minister will use the event to challenge eurosceptics who argue that Britain should leave the EU and adopt a “Norway-style” trading relationship with the bloc. He believes campaigners advocating Brexit use flawed arguments about the benefits to Britain of withdrawing from the EU while trying to maintain its influence in the continent’s internal market.

“He believes it is important to highlight the questions Britain would face if it left the EU and followed Norway’s model,” said a Downing Street official. The prime minister has promised to hold a vote on the UK’s membership of the EU by the end of 2017.

Although polls suggest Britain will vote to remain in the bloc, the gap seems to have narrowed since the general election in May, amid concerns about the recent Eurozone crisis and the EU’s inability to deal with mass immigration on its southern borders.

Mr Timmermans said that countries bordering the EU, such as Norway and Switzerland, were not immune from the immigration crisis: “They also see the refugee problem as their problem,” he said. “They want to be part of it [the solution], they have offered to be part of it.” Britain already had control of its own borders, he said, given that it was not part of the Schengen free movement agreement. “I’m not sure that Britain opting to leave the EU would make things better for the UK,” he said.

Source: The Financial Times, dated 28/10/2015.