Cut VAT On Green Goods – Retailers Urge Commission

2 March 2009

On the day the European Commission and retailers from across Europe launch the Retailers' Environmental Action Plan (REAP), UK retailers are calling on the President of the European Commission to show he is really serious about tackling climate change by committing to lower VAT on energy-efficient household products.

The REAP will catalogue the environmental achievements and commitments of retailers throughout the EU over what they sell, how they sell and how they communicate with customers. It is being launched today (Tuesday 3 March).

Through the British Retail Consortium (BRC), a string of UK household-name retailers agreed specific, industry-wide environmental commitments last year.

In addition the Commission is about to announce plans to use limited VAT reductions to encourage improved energy efficiency for buildings.

The BRC is today (Tuesday) writing to Commission President Barroso urging him to go much further by allowing retailers to apply a reduced rate of VAT to products with high potential for energy savings. These include televisions, home lighting, domestic appliances, loft insulation and double glazing.

All the evidence shows, price is the main barrier to improving the popularity of these green goods, so reducing taxation on them will play a huge role in making them more popular.

With household products accounting for 16 per cent of total energy consumption in the EU and 10 per cent of EU greenhouse gas emissions, this would make a significant contribution to achieving Europe's carbon reduction targets.

Part of the BRC's letter to President Barroso reads: "Major retailers are continuing to adopt green business practices as a means of achieving efficiency savings, as well as in response to consumer pressure for greener goods.

"We are helping millions of people make straightforward, affordable and more sustainable choices but we need politicians to help us go further. Reducing VAT on energy-efficient consumer goods is an essential part of delivering sustainability.

"The retail sector urges the Commission to come out with a robust proposal this spring which would enable us to become part of the solution in building a new green economy in Europe."

Alisdair Gray, British Retail Consortium Brussels Director, said: "Reducing emissions is not just about homes. It's about the equipment in them. The UK is in recession. Price is an even more important factor in customers' buying decisions. Retailers are doing a great deal. They need and deserve help to achieve more. By cutting VAT on ‘greener' household goods the Commission will show it's matching rhetoric with policy."

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