EU plans cut in VAT for local ‘labour intensive services’

Caterers, care homes and constructin firms will be among those interested to hear that the BBC reports that the EU Commission has unveiled plans to allow EU states to lower VAT rates for local service businesses, including restaurants and builders. Currently the minimum standard rate of VAT in the EU is 15%, although there are many exemptions. This would be a good example to use when discussing the effects of VAT on market supply for different goods and services in the AS micro course. The Guardian reports that “Zero-rated goods, such as children’s clothes in Britain, will be unaffected.”