News story

21st October 2001

Lib Dems Take Local Charity Fight To Europe

Northavon MP Steve Webb has joined forces with Lib Dem Euro MP Graham Watson in support of local charities who are protesting about the effect of VAT on fundraising. Two local charities—Thornbury Hospital League of Friends and local supporters of the Jack and Jill Appeal– had approached Steve Webb about tax rules which mean that VAT has to be paid on NHS building work even where it has been paid for by voluntary fund-raising. As a result, for every six pounds raised by the fund-raisers, an extra one pound has to be raised simply to pay the VAT bill. In the case of the Jack and Jill appeal, the VAT bill alone amounted to £470,000.

Steve Webb initially wrote to the Treasury to complain about this situation but was told that the UK is not allowed to introduce new zero rates of VAT. He then wrote again suggesting that at the very least a lower rate of VAT could be applied to charitable projects, but the Treasury said that this would require changes at Europe-wide level to VAT Directives. The Northavon MP then contacted South West Euro-MP Graham Watson who has now written to tax commissioner Frits Bolkestein asking him to look again at the rules, and has tabled a written question in the European Parliament.

Commenting, Steve Webb said:

“I am delighted that Graham Watson MEP has taken up this important issue with the European Commission. The Government seems to be hiding behind European rules and is reluctant to take any action to end this tax on charity. I have therefore joined forces with my colleagues in the European Parliament and we will press to get the rules changed so that fund-raisers do not have to spend time raising money simply to pay tax bills”.

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