The European Commission's proposals to allow reduced VAT rates on labour intensive and locally-provided services, is a victory for every professional builder and householder in the UK wanting to carry out repairs to their home, says the Federation of Master Builders (FMB) in its response to the Commission's proposal to change the VAT Directive 2006/112/EC to allow Members States to apply reduced VAT rates.
Brian Berry, Director of External Affairs at the FMB said,
"At a time when the construction industry is experiencing serious difficulties with many builders losing their jobs and householders increasingly unable to afford to maintain their homes a cut in VAT for repairs and maintenance work would help the building industry as well as millions of householders. It is really encouraging that the Commission is now proposing to allow Member States to cut VAT on home renovation and maintenance. All that is needed now is a commitment from the UK Government to cut VAT rates."
Berry continued,
"The problem is that cowboy builders flourish in this country by evading VAT by offering the public supposedly cheap deals which all too often leave the client ripped off. A cut in the rate of VAT on domestic building work from 17.5 per cent to 5 per cent would reduce significantly the commercial advantage of the VAT evading trader. The financial incentive to choose a rogue trader would diminish and create a level playing field. This would drive the rogue traders out of the market as customers begin to focus on quality and value and not just price."
Berry continued,
"Evidence from other EU Member States clearly shows the damage caused by high rates of VAT. Denmark which has the highest rate of undeclared work in the EU also has the EU's highest level of VAT (25 per cent). In Italy by contrast when they cut their VAT rates 35,000 enterprises emerged from the informal economy and started paying VAT for the first time, this then lead to the creation of between 65,000 - 75,000 new jobs in the construction industry."
Richard Hyslop, Cut the VAT Coalition Co-ordinator concluded,
"The economic case for lower VAT rates for the repair and maintenance of existing buildings is clear. It is time the UK Government listened not only to the European Commission, but also to the 72 per cent of MPs who also want to see VAT cut from 17.5 per cent to 5 per cent for all building repair and maintenance work. The time for excuses is over; the Government must act now and cut this pernicious tax."
7 July 2008
