Local view for "http://purl.org/linkedpolitics/eu/plenary/2009-02-19-Speech-4-024"
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"en.20090219.3.4-024"2
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"The European Commission’s proposal to permanently reduce VAT rates for locally provided services, including labour-intensive services is timely and aims to achieve rationalisation and simplification through necessary changes, fine-tuning, and creating the potential for the growth in jobs in sectors with low-skilled workforces while restricting activities in the grey economy, retaining jobs and ensuring equal treatment of the Member States including their economic operators.
One of the main arguments for reducing VAT is that it will provide more favourable distribution of income after consumption, by reducing the cost of the shopping basket of low-income households and increasing that of high-income households. The changes in the consumer structure also involve changes in the gross domestic product and productivity in the official sector, and the reduction of activity in the grey economy, such as services in the housing sector and other local services which are the subject of the present proposal by the European Commission. Of course, the potential net economic benefit of reducing VAT rates depends not just on the characteristics of the relevant sector, but also of the specific economic environment in the relevant Member States. For example, increasing the scope for reduced VAT rates in sectors with unskilled workforces presupposes an inflexible labour market, while in the food sector it presupposes significant differences in consumption between high and low-income households.
We should also bear in mind implementing VAT reductions will also reduce treasury revenue. As a proportion of the gross domestic product, this ranges from half to one-and-a-half percent of the GDP of the different Member States. Stable public finances during the current period of economic upheaval will allow the relevant governments to deal with the structural deficits in the current period. Even governments which do have room to manoeuvre will make use of options such as cutting VAT rates for labour-intensive services in order to achieve other aims of their economic policies. In view of the above facts and arguments, the Group of the Alliance of Liberals and Democrats in Europe will support the Commission’s proposal to ensure there is sound support in the European Parliament for this important stage of the decision-making process."@en1
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