European Parliament shuns VAT on postal services

MEPs have again rejected a proposal to add VAT to postal services across the EU.

The law, which would lift a VAT exemption on postal services agreed in the 1970s was rejected in the parliament’s economic committee by 16 votes to 12 with two abstentions.

The majority on the European Parliament’s monetary affairs committee consisted mainly of centre right MEPs.

The UK is particularly opposed the directive as it thinks it will raise postal prices for consumers, despite the inclusion of a reduced rate for standard post.

A plenary vote of the full European Parliament will now be held on March 10, after which national governments will consider their position.

MEPs have already rejected the draft in a plenary vote on December 15 but the commission refused to withdraw proposals.

As it falls under the consultation procedure, parliament’s view is not binding, however, and EU finance ministers have the final say.