DX call for rebalancing of mail market in UK

DX Mail services has reminded Postcomm that the present VAT exemption enjoyed by Royal Mail makes the mail market in the UK somewhat unbalanced and since Postcomm has no powers to change this directly, it should consider ‘levelling the playing field upwards through the adoption of measures that positively discriminate in favour of new entrants’

DX argue that the VAT exemption status of Royal Mail means that rivals are at a disadvantage in comparison with RoyalMail, and TNT and UK Mail (who use Royal Mail for the final mile delivery) are able to take advantage of the recently introduced agency agreements to minimise VAT liability for their customers whereas DX has to apply VAT.

The European Commission sent formal requests to the UK, Germany and Sweden in 2006 with regard to VAT application on postal services and more recently TNT, the Dutch postal operator has raised concerns over VAT in Germany where Deutsche Poste AG also enjoys VAT exemption for 40 pct of its operations.

However, the German Economy Minister, Michael Glos, recently announced plans to restrict the VAT privalege, and the USO in Germany will in future by VAT free for competitors as well as Deutsche Poste.

DX Mail services has reminded Postcomm that the present VAT exemption enjoyed by Royal Mail makes the mail market in the UK somewhat unbalanced and since Postcomm has no powers to change this directly, it should consider ‘levelling the playing field upwards through the adoption of measures that positively discriminate in favour of new entrants’

DX argue that the VAT exemption status of Royal Mail means that rivals are at a disadvantage in comparison with RoyalMail, and TNT and UK Mail (who use Royal Mail for the final mile delivery) are able to take advantage of the recently introduced agency agreements to minimise VAT liability for their customers whereas DX has to apply VAT.

The European Commission sent formal requests to the UK, Germany and Sweden in 2006 with regard to VAT application on postal services and more recently TNT, the Dutch postal operator has raised concerns over VAT in Germany where Deutsche Poste AG also enjoys VAT exemption for 40 pct of its operations.

However, the German Economy Minister, Michael Glos, recently announced plans to restrict the VAT privalege, and the USO in Germany will in future by VAT free for competitors as well as Deutsche Poste.

Steve Lawson, editor of Hellmail the European postal news site said:

“Postcomm are currently asking for views from the postal industry so it can prepare a regulatory framework for 2010. There are clearly many areas of postal deregulation that will need careful examination if they are to get it right but it is vital that throughout this consultation, that the Univeral Service is adequately funded over the coming years rather than passed onto the public to fund through massive postage price rises.”

“I think domestic customers have been asked to give up a great deal this year with the closing of so many Post Offices and what we don’t want to see is the service worsening and prices go through the roof.” he said.