Tampon Tax (November 2015)

I have recently received a number of queries about removing VAT from sanitary products. This is sometimes referred to as the ‘tampon tax’. This matter, being covered by European Union law, is somewhat complicated so I have outlined the current position below which I hope is helpful for constituents who have contacted me on this issue.

Contrary to what may have been reported on some campaign websites, I voted for the Government’s proposal to seek the consent of the 28 EU member countries to reduce the VAT from 5% to zero.

As a member of the EU, the UK cannot unilaterally zero-rate any item from VAT without each of the 28 other country members of the EU, and the European Commission, giving its approval. The lowest the VAT rate can be set without this approval is 5%. This is the current VAT rate for sanitary products (so below the 20% VAT rate set for other products). There are some products which attract a zero rate of VAT in the UK but these levels were negotiated many years ago when the harmonisation rules were agreed between EU member states. The UK has more products at a zero-rate of VAT than many other EU countries (such as books, newspapers, certain food products and children’s clothes). 

The reason why EU states have ceded their own individual rights to set VAT rates below 5% is down to a realisation that, in a free market, people would hop over the border and buy cheaper taxed products from one country if any country could zero-rate. When considering the ease in which a shopper can go from Ireland to shop in Northern Ireland, it is easy to follow this argument. As a contrary argument, others feel that competition on tax levels is a good thing and should be liberated. There is a feeling within Europe that some of these powers may be devolved back to national governments. If the UK votes to leave the EU then sanitary products would be capable of being rated at zero for tax by the UK. 

The matter of reducing VAT from 5% to zero for sanitary products was recently debated in the House of Commons. I support the idea that sanitary products should not be taxed at all. A number of MPs argued that the UK should be free to set this level of tax and wanted to push this into legislation. The Government reminded the House of Commons that if Parliament brought in a law to remove VAT from any product without the consent of the 28 EU members, this would be unlawful. The reason for this is that laws from England and Wales (and Scotland) must comply with EU law or will be struck out by the courts. I could not support a law which would be obviously struck out. To do so would be antagonistic to other European countries, would disappoint constituents when the court overturned the decision and would not be a good use of time or taxpayer funds. 

An amendment was brought forward which would have committed the Government to conduct a three month negotiation exercise with the 28 EU member countries, and the European Commission, to gain their consent to zero-rate sanitary products. The Government took the view that this approach was unlikely to lead to success (not least because many EU members regard the UK as having more than its fair share of zero-rated items). Instead, the Government pledged to take this matter up with counterparts across Europe. As the Government is currently negotiating the UK’s EU membership rules, it makes sense for the Government to fold this issue into discussions about powers which the Government are seeking to take back from EU control. 

The vote in the House of Commons on this issue was divided between those who wanted to tie the Government to a three month negotiation exercise and those who wanted to give flexibility to the Government to negotiate as part of the EU renegotiation strategy. Both sides supported the need to reduce the VAT rate on sanitary products to zero. It would be correct to say that all MPs, whether they voted for or against, were favouring VAT rates being reduced to zero on sanitary products but the votes divided on differing ways to achieve it. I voted on the side which I felt was straight, honest and did not raise expectations. 

I support constituents who are campaigning for sanitary products to be zero-rated for VAT. My vote was cast to support the Government when it told the House of Commons that it would seek to negotiate the consent from the 28 EU member states and the EU Commission. I did not vote to tie the Government to a three-month limit because the UK does not have any power to demand such a timetable in these circumstances. I believe in being realistic and straight with constituents and not making promises which cannot be delivered and lead to disappointment.

I will follow continue to follow this issue closely as it enters European renegotiation discussions.

November 2015