h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

I noticed something today when checking my electricity bill - apparently I have to pay VAT. Now, as electricity is classed as an essential why the hell do I have to pay VAT on it? Phones are no longer classed as luxury items either and yet I still pay VAT on that too. Am I missing something here?

Aren't there two levels of VAT? In France it's 19.6% for luxury items and something like 5% for non-luxury items (which since recently include the catering business).

In the UK it's 5% for energy. The standard rate is 17.5% (currently reduced to 15% until 31 December 2009).

RF

Isn't there a climate tax on your bill too? On the basis that paying the govt more money will somehow feed polar bears or something?

A climax tax

Sex at noon taxes?

Struth there's a climax tax? I best go into excile I must owe a fortune

I must be due a rebate.

So why is there a 5% tax? Is this a climate (dammit I almost typed climax) tax? I'm with a company that promotes sustainable energy and I'm on a special economy tariff cos I have ground source heating, so my eco credentials are better than most :-S

VAT on fuel was introduced by Norman Lamont in his 1993 budget at the rate of 8%. In their manifesto for the 1997 election, Labour promised to reduce it to 5%, "the lowest level allowed". This leads me to suspect that it was in fact a European regulation that forced the UK government to impose VAT on fuel in the first place.

It's a bit difficult to find information on this as it predates the mass internet era.

RF

Can we get VAT off sanitary products first? Not often I decide to treat myself to a tampon, but people can and do live without leccy.

I *think* it's been removed from sanitary products, but feel free to double check and correct me on that!

VAt is still charged on sanitary products at the reduced rate (5%). This document from 2001 outlines what does and doesn't qualify for the reduced rate: http://www.hmrc.gov.uk/manuals/vwspmanual/VWSP2000.htm

As I suspected for the fuel VAT rate, this seems to be due to EU law. I'm not sure if the government has the power to remove VAT from sanitary products altogether.

RF

People can and do live without sanitary products too, or at least without the disposable sorts.

Just because they can be done without doesn't make them a luxury, surely? If we dont pay VAT on cake, then we shouldn't pay it on sanitary products!

Oh I agree, I was just responding to Mina saying electricity was less of a necessity than tampons.

Most shops rebelled against the VAT on sanitary products a good few years back by reducing the prices, thereby paying the VAT themselves (I think Boots was the leader in this one). As far as I know this is still the case.