Britain was on a collision course with Brussels last night as fears grew of a new European Union push to end the right to exempt children’s clothes, newspapers and books from VAT.
The Treasury said the exemption was worth more than £28 billion to UK households each year and saved low income households four per cent of their annual spending.
It vowed to wield the national veto if necessary after the European Commission announced a new “political debate” on how to streamline the patchwork of VAT rules that apply across the 27 EU states. Under these rules, Britain is able to keep a so-called “zero rate” of VAT on the printed word and children’s clothes indefinitely.
But the EU tax commissioner, Laszlo Kovacs, signalled that he wanted to look again at simplifying the regime – which could end the UK’s exemptions. Mr Kovacs said he would seek the opinions of member states.
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