Aren\’t we just so lucky to be part of such a system?

Households will have to pay hundreds of pounds more to insulate their homes if Britain loses a legal battle over VAT with Brussels.

The row threatens to further undermine the Government’s “Green Deal” energy efficiency programme, which ministers have billed as the biggest home improvement project since the Second World War.

Many energy-saving measures are charged at the lower VAT rate of 5 per cent, covering products such as controls for heating and hot water systems, as well as having solid wall or loft insulation installed.

But the European Commission has ordered the UK to apply the standard higher rate of 20 per cent, claiming that the 5 per cent charge breaches European Union legislation to remove what it sees as tax distortions.

For clearly making sure that it is more expensive to insulate houses will contribute to Germany avoiding invading France. Again.

That a government cannot even vary the tax system to stop Gaia boiling is something of a diminution of sovereignty, isn\’t it? And what really irks is that none of those screaming that we must do the insulating will stand up and point the finger at the EU.

Can we leave yet?

7 comments on “Aren\’t we just so lucky to be part of such a system?

  1. At least, it would appear, you get the choice.

    Here, because most of the housing is rented, if the landlorrtd decides to insulate, we do not get the choice, just a bloody great lump added onto the rent.

    The question they refuse to answer is “As the walls are already half a meter thick, what bloody difference to they thing two centimeters of foam, and a bit of glue going to make?”

  2. Yet surely it is less distortionary to apply the same rate of VAT to everything?

    With lower VAT on roof insulation, aren’t we doing (relatively) too much roof insulating, while in absolute terms still not enough because there is any damn tax on the activity in the first place?

  3. It is distortionary, because we will spend more on insulation and less on fuel, which is taxed at the higher rate.

    That might even be good for the environment, but its against the rules so there.

    Next we will have the government giving subsidies equivalent to the 15% difference, at great cost to administer, but this will be good because it helps meet our 20/20 targets set by the EU

  4. Funny isn’t it?

    Must be like the religions in Egypt or Greece long, long ago.

    You have a pantheon of the gods and a strict order of precedence, all taken on faith.

    Normally, one would expect green to trump everything, but not it seems in this case.

    Strange, because just like with the old religions, modern zealots seem capable of thinking three opposing views at the same time.

    Just shows, times change, but the human condition lingers on…

  5. “For clearly making sure that it is more expensive to insulate houses will contribute to Germany avoiding invading France. Again.”

    Reminds me one of Mark Steyn’s wisecracks.

    “The EU is a 1970s solution to a 1930s problem”.

  6. It is distortionary, because we will spend more on insulation and less on fuel, which is taxed at the higher rate.

    Yet the whole point of this lower rate thing is that it is the rate at which domestic energy supplies are taxed? Or am I missing something trivial, as usual?

  7. You are all missing the point – the UK’s contribution to Brussels’ coffers are a percentage of UK VAT receipts. So if we have a lower rate of VAT on home insulation, the quality of the wine at EU lunches might decline.

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