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9am lowdown: ‘Tampon tax’ issue to be raised with EU

27th Oct 2015
Editor AccountingWEB
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Good morning. The stories you are waking up to today include a review on the 5% VAT rate on sanitary items, and news from the AccountingWEB community.

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‘Tampon tax’ issue to be raised with EU

The so called ‘tampon tax’ on sanitary products will be raised with the European commission, as there is growing demand to override the EU VAT rules.

Treasury minister David Gauke has said the government sympathised with efforts to force a negotiation with the EU for a reduction in the 5% VAT rate on sanitary items. But he has said that the UK was unable to apply a zero rating under EU law.

The attempt to get rid of the 5% VAT rate is led by Labour MP Paula Sherriff, who is tabling an amendment to the finance bill. 

petition calling for a change in the law has more than 250,000 signatures.

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VAT MOSS EU portal Survey

The European Commission MOSS web portal survey, which was originally opened until 18th December, has now been brought forward to the 30th October.

The survey asks users to assess the relevance of the information provided and indicate which additional material would useful for businesses.

If you have been affected by VAT MOSS and wanted to participate in the survey, complete the survey before in closes in a few days.

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From the community: PwC targeting small businesses?

Over on Any Answers, Matrix uncovered a PwC ad which suggests that the firm are ‘targeting small businesses with their packaged services from £350 pcm’. Although, Matrix points out that another advert he has seen quotes the price at £300.

PwC is offering cloud accounting and dedicated manager meetings, and it looks as if the clients fo the book keeping and VAT returns. Matrix said: “It looks pretty much what we all do, just packaged differently and at a price.”

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Replies (6)

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Time for change
By Time for change
27th Oct 2015 11:45

Tampon Tax - more than overdue review

A strange item for a chap to be taking about?

Between 1999 and 2006 I had the privilege to contribute to a couple of BBC local radio stations, once each week. Throughout those years I had two pet topics; lack of financial education in schools and, the absurdity that women had to pay vat on sanitary products.

To my mind these products were medical items and, therefore, should have been deemed exempt. Some say change takes 10 years!

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By MattG
28th Oct 2015 15:21

Zero rated or Exempt....?

Time for change wrote:

To my mind these products were medical items and, therefore, should have been deemed exempt. Some say change takes 10 years!

Would making them exempt necessarily make them much cheaper? If we make the assumption that the entity producing the tampons only sells this one product (so we can ignore partial exemption), then they would not be able to register for VAT, could not reclaim their input VAT and consequently would have higher operating costs, which naturally will be passed on to the consumer.

If this was a change from 20% standard rate to exempt, then yes the non-recoverable input VAT will clearly be less than the output VAT, but going from 5% to exempt may not be quite so clear cut.

If we assume under the current model a product sold for £1.05 (including 5p VAT) costs say £0.90 to produce and sell and the retailer wants the same profit margin in future, then if more than 25% of the business costs would attract non-recoverable VAT the overall cost to the consumer would actually increase!

I understand the current campaign is actually for zero rating, which would be fine and would reduce the cost to the consumer. But in any case it's a pretty small issue in my (admittedly male) opinion. My back of an envelope calculations, using brand name items and no bulk discounts gave an estimate of just £1-2 in VAT per annum, not exactly bank breaking amounts. At least it's relatively easy to understand, unlike confectionary when you have to determine how many blooming chocolate buttons are on your gingerbread man!

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By DMcIver
28th Oct 2015 09:16

Labels

I 100% think that tampons should NOT have VAT on them.

Am I the only person who finds the labeling of such issues really annoying? "Tampon Tax" "Pasty Tax" etc. I just find that it makes the normal person on the street not know that it's VAT unless they read the articles in detail and think it's some particular one-off tax on the products.

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By mwngiol
28th Oct 2015 10:38

VAT

I'd support this if they were also asking for toilet paper to be exempt.

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Time for change
By Time for change
29th Oct 2015 12:22

Nothing to do with cost

in my humble opinion. It's the very principle of the matter.

The tampon has been in use as a medical device, since the 18th century.

Incontinence pads seem to be treated in that manner.

The bigger issue of course, is the whole mechanism and application of value added tax. Imagine, making a differential between; straw intended for bedding and, straw intended for feed?

Clarity was never a virtue of politicians though, was it?

 

 

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By MattG
29th Oct 2015 13:13

Fair enough. The number of borderline issues caused by the current system is ridiculous. The idea of public funds being wasted on working out if Jaffa cakes are cakes or biscuits, if Pringles are crisps and of course the great ferret census to work out whether they are working animals is insane. Make it a lower rate and apply it to evenly to most things - e.g. all food and clothes and it would be a lot more straightforward.

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