UNIEP contacted the European Commission
UNIEP president Erik Kruiderink contacted the European Commission on a consultation regarding the reduction of VAT
23 May 2008:
Dear Sir,
Herewith we respond to your invitation to submit comment on your Consultation Paper “Review of existing legislation on VAT reduced rates”. UNIEP is the representative European Association of painting companies which has as its members national painting associations in Europe. UNIEP represents approximately 80% of the companies, turnover and fte’s concerned.
Firstly, we should like to confirm the conclusions in the investigation of Copenhagen Economics that:
- in order to be effective reduced rate measures need to be definitive;
- reduced rates are most effective where the services are supplied to private consumers; this is the case in the painting business of private dwellings;
- if production is labour-intensive there seems to be a stronger production and employment response to lower VAT-rates in the industries affected; this is the case in the painting business of private dwellings;
- lower VAT rates can increase overall productivity and GDP in a member state if they can induce consumers to spend fewer hours on do-it-yourself activities and more hours on their ordinary job and thus shift activities from do-it-yourself to the formal economy; this is also illustrated in the painting business of private dwellings;
We further add that UNIEP-research in 2006 showed that reduced VAT- rates for painting works in private dwellings have no impact on the European internal market.
We therefore urge for a swift adoption of a definitive article which enables member states to remove uncertainty as to reduced rates of VAT for “renovation and repairing of private dwellings”. Copenhagen Economics justly states that reduced VAT rates need to be definitive in order to be effective. In 2003, 2004 and 2006, we experienced the impact of uncertainty over tariffs in the painting market when for some time uncertainty existed about the continuation of reduced VAT for painting works. This is yet another strong signal that all parties, i.e. the Commission, Member States, consumers and painting companies, will profit from swift clarity as to the definitive directive on reduced VAT rates for painting works on private dwellings.
We would like to make one final remark. In your Consultation Paper, you suggest that you might consider to reformulate the possibility of reduced VAT rates for “renovation and repairing of private dwellings” into “small renovation, repair, maintenance and cleaning of housing”. If there is a need to develop a new formulation for the new Council directive, we would like to point to the fact that it is of the utmost importance that a new formulation will not restrict present practice in those member states that apply reduced VAT rates for painting work in private dwellings. It is important that member states can continue to apply reduced VAT rates for painting works on the scale they apply it today.
We send as annexes:
- Fact sheet on Costs and benefits of the reduced VAT rate for maintenance work to homes, by drs. J. Schellevis, Economic Institute for the Building Trade, Netherlands (Economisch instituut voor de Bouwnijverheid (EIB), March 2005
- UNIEP-letter with the results of UNIEP-research in the European painting market shows that reduced VAT rates in the painting business of private dwellings have no impact on the European internal market,
Brussels, 23 May 2008
Erik Kruiderink
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