European parliament supports VAT on postal services

The European Parliament adopted a motion for a Resolution on March 11 supporting the broad outlines of the Commission’s May 2003 proposal to abolish the VAT exemption for public postal services (see European Report 2774 for further details). Adopted in the context of consultation procedure, the report drafted by Olle Schmidt (ELDR, Sweden) will be submitted before the Council, which much reach its final decision unanimously. The Commission’s proposal amends the Sixth VAT Directive to place the public sector (exempt from VAT) and the private sector (subject to VAT) on an equal footing, applying a single, standard or reduced rate for general mail under 2 kilograms. However, Parliament has amended the Commission text proposing notably to allow Member States to apply reduced tax rates on postal services in order to avoid or limit price increases to the minimum.