UKIP’s Luxury Goods Tax

UKIP has today floated the idea of increasing VAT on luxury goods to 25%.

But in an amusing – if unsurprising – irony, UKIP doesn’t appear to have bothered to read Council Directive (2006/79/EC) which provides (see Articles 96 and 98) that Member States may only levy a standard rate of VAT and (in certain prescribed circumstances) lower rates. It’s simply not open to UKIP to impose a higher rate of VAT. Hungary has tried this in the past – but failed. “Investigating the feasibility” seems to mean, in UKIP speak, something less than a quick google search.

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16 thoughts on “UKIP’s Luxury Goods Tax

  1. Although in a UKIP nirvana they would not be subject to Council Directives…

  2. Many things in a UKIP nirvana would be, well, different.

  3. He’s actually raised two ideas, the luxury goods one and then the abolition of zero-rating for personal exports: “tax free shopping”.That is also a fundamental part of EU VAT rules, so I suspect he knows very well that it can’t be done, and aims to use that as another reason why we need to leave.

  4. I enjoyed the proposal to block tourist VAT refunds. Because what we really need to do is discourage tourists from Europe, US and China coming to UK and spending money in our shops and hotels

  5. What about the turnover tax which falls foul of article 401 of the same directive (2006/112/EC for the pedants) unless he’s going to try and mirror IRAP

  6. To be fair to UKIP in order to be implementing their tax proposals they’d also be in a position to implement their EU policy. So critiques based on EU law are a bit silly. There are however much better critiques based on them being bat shit crazy though.

  7. Mmmm. If you read that statement it is predicated on them being in the EU. So presumably they are contemplating a world in which they’re a coalition partner. In other words, I disagree 🙂

  8. Sorry. In which case they’re even more amateur than I thought.

  9. Much of the mainstream press commentary on VAT forgets the fact that it is an EU tax and there is very little freedom for the UK to set policy. The so-called “pasty tax” is an example of this.

  10. They do, everblue650, they do. And not just the press but the political parties too: not merely UKIP but also the SNP.

  11. Since all VAT revenues go to the UK, how is VAT an EU tax? If we didn’t have it, we would have to raise ‘UK’ income or corporate taxes.

    The broad rules for VAT are set by the EU so that British companies can sell their goods across 27 other EU member states under the same rules as they would in the UK. So brings clarity and certainty.

    You wouldn’t object to that would you?

  12. @Richard

    I don’t object to VAT, by any means, except that it’s not a very progressive tax and falls disproportionately on the poor.

    All I am saying is that criticising the government for the pasty tax (for example) when it is merely reluctantly enforcing an EU rule is a bit harsh.

  13. I’m not sure “nirvana” is the correct word!

  14. Perhaps you could help me understand something jolyon. Recently, whilst visiting a friend in Switzerland, I bought an number of items that had VAT added to them. Switzelrnad is outside the EU but – I believe – inside the EEA. VAT in Switzerland is therefore a domestice duty(?)

    Wjilst I don’t like Ukip – and Nigel Farage has since acted to quash this “idea for discussion” – it does seem to be perfectly logical for a post-EU UK to keep VAT as a purely domestic measure, but one which would confirm to the practice of our trading partners in Europe. What am I missing?

  15. We could certainly have a consumption tax, and we could certainly call it VAT: lots of countries do both…

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