Myth: UK is powerless to cut VAT
InFact: Single market requires common standards, but UK still has room to manoeuvre on VAT, or cut rates.
VAT is harmonised within the single market for a very good reason – as products can be freely transported across borders, you do not want people simply shopping around for the country with the lowest rate. That said, Britain is still free to cut the main VAT rate to as low as 15%, or to offer a reduced rate on a range of extra products and services. A new EU deal also means we will soon be free to set a zero rate for tampons.
Edited by Hugo Dixon