Treasury written question – answered at on 17 October 2006.
To ask the Chancellor of the Exchequer what consideration his Department has given to reducing VAT on pure fruit drinks.
Most foodstuffs are VAT zero-rated, saving consumers approximately £10.6 billion in the last financial year. This zero rate does not however extend to certain beverages, including fruit drinks. Under binding European VAT agreements, made at the time of the UK's accession to the EC and subsequently, the UK can maintain its existing zero rates but successive Governments have agreed not to extend these, or to introduce new ones. It is therefore not possible under these agreements to remove VAT from fruit drinks and other beverages.
These same agreements do allow the UK to introduce a reduced rate of VAT of not less than 5 per cent. for foodstuffs which are not zero-rated. While all taxes are kept under review, the use of VAT reduced rates have been used where the tax system offers the most effective and best targeted support for our social objectives, when compared with other policy instruments.
The 2004 Wanless report on public health highlighted difficulties of principle and practice with dietary based tax changes to support public health. To date, the Government have therefore focused resources to encourage healthy eating choices outside the tax system.
Yes7 people think so
No4 people think not
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