Taxation: VAT

House of Lords written question – answered on 30th March 2006.

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Photo of Lord Inglewood Lord Inglewood Conservative

asked Her Majesty's Government:

Whether they will make an application to the European Commission by 31 March, in accordance with the agreement reached by the European Union Council of Ministers in February, to extend Annex K of the Sixth European Union VAT Directive until 2010 in order that the United Kingdom can keep open the option to introduce a reduced rate of VAT in respect of the labour component of repairs to older buildings at any time during the next five years.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Government Whip, Government Whip

The VAT reduced rate for the renovation and repair of private dwellings is one of a number introduced into EU legislation on an experimental basis whose objective is to create employment opportunities by stimulating demand through lower prices. The Government have always chosen not to participate, as we believe that our employment objectives are better targeted through measures such as the welfare to work strategy and New Deal, which have contributed to the 2.4 million rise in employment since 1997. We continue to take this view.

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