Wouldn't they need permission from the EU to do this? Correct me if I'm wrong, but isn't our VAT rate is set by the EU?
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A common VAT system is compulsory for member states of the European Union. The EU VAT system is imposed by a series of European Union directives, the most important of which is the Sixth VAT Directive (Directive 77/388/EC). Nevertheless, some member states have negotiated variable rates (Madeira in Portugal) or VAT exemption for regions or territories.
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Value added tax - Wikipedia, the free encyclopedia
I'm also curious to know whether the Lib Dims would be allowed to do it, given signals from Brussels that they might seek to end the current zero VAT exemptions in the name of 'harmonisation'.
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Originally Posted by Telegraph
The UK applies the lowest rate on domestic fuel and power. Certain goods are exempted including postal services, medical care, lending, insurance and betting. On joining the European Economic Community in 1973, Britain won the concessions for a zero rate on books, newspapers and children's clothes.
The commission said it wanted to reopen discussions on rules its described as "highly disparate and very complex". The commission would like to see the zero-rate VAT band abolished.
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EU wants tax on books and children's clothes - Telegraph