Geen akkoord over BTW-verlaging voor restauranthouders en kappers (en)

EUOBSERVER / BRUSSELS - Six EU member states made a stand against further expansion of areas with reduced VAT across Europe at a meeting of the bloc's finance ministers on Tuesday (8 November).

Germany, Austria, Sweden, Denmark, Estonia and Slovakia oppose the compromise solution produced by the UK presidency and supported by other countries and the European Commission.

If adopted, the proposal would allow member states to apply lower VAT (to a minimum of 5%) in a set of new areas, such as labour intensive services (e.g. hairdressing, shoe repairs, bicycle repair, small-scale construction work) and some local services as well as restaurants.

The restaurant VAT reduction has already been promised to France by president Jacques Chirac.

"The proposal is unacceptable, as it would further damage the internal market by adding new derogations for VAT and making the whole of the EU's system of indirect taxes even more complicated and burdensome for businesses," said Slovak finance minister Ivan Miklos.

He suggested that even the politicians proposing the measures are aware there are no major advantages from such derogations in terms of boosting growth or employment in the respective sectors, pointing out they did it for "political, not economic reasons."

However, the British finance minister Gordon Brown said he still hoped the issue could be solved during a December council meeting, which should also be attended by the new German finance minister.

Industry impatient

Several industry lobbies have strongly condemned any further delay in tackling the issue, however.

The labour intensive services are currently covered by a provisional measure - applied in nine old member states, plus Poland and the Czech republic, which will expire by the end of this year.

"It is imperative that finance ministers agree on the renewal of this scheme by the beginning of December, as failure to do so will plunge the business community into chaos," said Hans-Werner Mueller, from UEAPME, representing small businesses.

The group fears consumers would be faced with price jumps of up to 15 percent in some areas.

These include mainly small, often family-run businesses that rely on local markets and cannot absorb drops in demand, so the end of the reduced rate scheme could also mean the end of them, UAPME added.

The European Builders Confederation argues the new VAT rates would lead to job losses of around 250,000 in the housing sector, while "the only real winner would be the shadow economy."

However, opponents of a further prolongation of the reduced rate scheme, or a permanent inclusion of the services it covers under the chapter for reduced VAT, stress that it has not actually lead to any concrete results in terms of employment or growth.

The countries opposing extension also consider other compromise packages unacceptable.

"The French want restaurants, the Portuguese road bridges, and the Belgians garden maintenance services. That leaves quite a number of new exceptions from the standard VAT rate - but who will figure the whole system out after all?" one EU expert commented.