Is the European Union planning to extend the range of goods subject to Value Added Tax (VAT)?
The growth of EU authority over indirect taxation (VAT) illustrates the danger with EU law - a self-driven and continuous accumulation of power.
Article 99 of the Treaty of Rome called for the harmonization of indirect taxation to ensure "the proper functioning of the internal market" and in 1967 two directives required the adoption of VAT by all member states. The UK joined the Common Market on 1 January 1973 and VAT was introduced in Britain from April 1973.
In May 1977 and again in June 1978 the European Court forced Britain to end exemption and zero rating in several areas including construction of buildings, commercial fuel and power and news services.
The draft of the proposed European Constitution confirms the EU's rights and intentions in this field. Article III, 62 states that "European Law shall lay down measures for the harmonization of legislation concerning turnover taxes, excise duties and other forms of indirect taxation."
In short, Britain is obliged to harmonize VAT with Europe and will be obliged to charge VAT children's clothes, food, public transport, new houses, newspapers and books.
The European Commission intends to enforce the existing VAT system on Internet transactions, imposing a requirement on ecommerce firms to register, collect and account for VAT in the appropriate jurisdiction, even though there is no international agreement or consensus on this issue. (Outside the EU such transactions are free of VAT.) *