Yesterday, the House of Commons debated Finance Bill New Clause 7, an amendment to force a negotiation with the EU for a reduction in the 5% VAT rate on sanitary items. The Hansard record of this debate is available here.
VAT on tampons and other sanitary products should be zero and it was clear that this was the will of the House of Commons. However, EU VAT rules prevent Parliament from eliminating VAT on these products: the cross-party will of the Commons is trumped by EU law.
As I said in my speech, there were several courses of action open to the Government. The first was to do nothing and this was clearly untenable: that was why we were having the debate.
The second was for the Government to negotiate the power to set such taxes within the EU as it is: the proposed amendment would have forced that course of action.
The third was to legislate “notwithstanding the European Communities Act” which would have been a bold move and one I would have supported. It is not currently politically realistic. The Prime Minister could include all tax powers in his renegotiation, but it seems unlikely.
The final thing that could be done would be for us to leave the European Union and decide all matters of taxation in our own Parliament.
In response to my intervention, the Government committed to taking this matter to the European Commission to negotiate an exemption, rendering the amendment unnecessary:
Mr Baker:I have listened extremely carefully to my hon. Friend and he knows how seriously I take this issue. Will he reassure me directly that he will specifically press the European Commission to bring forward measures to zero-rate tampons and sanitary products right across the EU?
Mr Gauke: Yes, I will make those representations to the European Commission to allow member states to have the flexibility to do that, which I think is the key issue here.
This explicit commitment is a positive victory: the Government will ask for the power to cut VAT on tampons which we do not currently have. I feel sure members of all parties will return to the issue in the months ahead until it is resolved.
Update: The amendment has been scandalously misrepresented. It did not cut the tax, which Parliament cannot do under EU rules. It required a statement on a strategy and a progress report: that is a Parliamentary device, not a tax cut.
The text was as follows:
To move the following Clause— NC7
“VAT on sanitary protection products (No. 2)
- (1) Within three months of the passing of this Act, the Chancellor of the Exchequer shall lay before both Houses of Parliament a statement on his strategy to negotiate with the European Union institutions an exemption from value added tax for women’s sanitary protection products.
- (2) A Minister of the Crown must lay before Parliament a report on progress at achieving an exemption from value added tax for women’s sanitary protection products within European Union law by 1 April 2016.”
The European Commission now appears to wish to make progress on this issue: EU to consider British plea to scrap ‘sexist’ tampon tax. This is a victory and it is a pity that some are misrepresenting the vote instead of celebrating the real progress which has now been made.