§ Lord Tebbit
asked Her Majesty's Government:
Whether in the light of the statement of the Chancellor of the Exchequer that "Tax policy should continue to be decided here in this House (of Commons) not in Brussels" (col. 182, Hansard, 16th March 1993) it is that House or some other authority which renders it impossible to raise the VAT threshold above £37,600.
The Earl of Caithness
VAT is the principal form of indirect taxation in the European Community. The United Kingdom, in common with the other Member States of the EC, agreed to the provisions of the EC Sixth VAT Directive and has subsequently agreed to amendments to it and to other directives on the subject. These provide the framework for the operation of the tax and its co-ordination between different member states in the Single Market, including arrangements for exempting small businesses from charging VAT.29WA
Within the current agreements, the United Kingdom has a turnover threshold for registration for VAT significantly above that of any other member state. Even so, the Government are concerned that member states should have greater flexibility. In this context the Government welcomed the conclusions of the Edinburgh summit, which called upon member states to reduce the administrative burden on small businesses through, amongst other things, the use of exemption limits in the field of taxation. The Government look forward to progress towards this aim, possibly through the adoption of an appropriately amended version of the draft Small and Medium Sized Enterprise Directive.