EU took £5.8bn from VAT & duties paid by UK consumers on goods & services last year.
I bet you did not know this bit of highway robbery news.
The EU’s system of collecting money from member states is complex. Here is a simple explainer of part of that process.
This is a story of how so much of what the UK sends the EU each year comes from what people spend in the course of their daily lives. You, me, the folks' next door to us all. Please read it and then weep at the sheer stupidity of the political parties like the Conservative, Labour, Lib Dems, Greens who have MPs who want to remain in the EU. At the sheer stupidity of people like Femi Oluwole, his chums at Our Future, Our Choice, who have no idea what actually is going on.
VAT and duties on what we all bought, sent to the EU in the tax year ended Apr 2019
- VAT payments to the EU — £3.14bn
2. Customs payments to the EU — £2.64bn
3.Grand total £5.78 billion
What happens to the VAT you pay on goods and services?
We all have to pay VAT on the goods and services we buy. The standard rate in the UK is currently 20% and this is remitted by suppliers to HMRC in their quarterly VAT declarations. The EU then takes a proportion of the VAT paid by UK consumers via what it describes as “a complex statistical process”.
In the Treasury’s latest figures for the tax year 2018/2019
the total for the UK in VAT payments was £3.14bn.
This £3.14 billion was then included in the Treasury’s totals for what the UK sent to the EU in the tax year ended Apr 2019.
In effect, every time you buy something you are doing your bit to help the EU. To put it another way, if everyone in the UK bought twice as much, then the EU would benefit from another £3.14 billion.
OK, now we understand how much we pay to the EU in VAT lets move on a little to what we pay to the EU in other areas.
What happens to Customs Duties on imported goods?
The EU has something called “the Common Customs Tariff”. This is a very lengthy list of products to which a variety of tariffs are applied before they can enter any EU country from non-EU countries.
If you buy something imported from the USA or Australia, then the UK Government has already been obliged by the EU to charge a tariff, or ‘duty’, on that product. Depending on the product, these tariffs can be anything up to 45%. Currently, the UK Government then has to give 80% of that tariff to the EU
What happens to Customs Duties on imported goods?
In the Treasury’s latest figures for the tax year 2018/2019
the net total for the UK for Customs Duties was £2.64bn.
This £2.64 billion was then included in the Treasury’s totals for what the UK sent to the EU in the latest tax year.
In effect, every time you buy something from outside the EU — from our Commonwealth friends in Australia and New Zealand for example — you are doing your bit to help the EU.
To put it another way, if everyone in the UK bought twice as much from outside the EU, then the EU would benefit from another £2.64 billion.
See how we are the EU's very own cash machine?
Customs duties retained by UK may halve in the EU’s next budget
Last year the EU Commission presented its new budget proposals for 2021–2027. As part of the new budget, the Commission proposed to halve the number of customs duties which can be retained by member states.
Currently, as stated above, the EU generously allows member states to retain 20% of the customs duties they collect on the EU’s behalf. The Commission proposed to reduce this to 10%, thereby halving the amount retained by the UK.
To put this into context, if this proposal had been in place in the latest tax year, the UK would have faced a bill for customs duties of £2.97bn — an increase of £0.33bn. This would have taken the total of VAT and customs duties to £6.1bn.
Confused? I am not the slightest bit surprised that ordinary voters are sometimes confused when it comes to what the UK pays to the EU each year as no one, not the media or our MPs have ever tried to explain it all to us all and that includes both Remain and Leave. You have to dig deep into treasury figures to get to the truth.
This article focused on just one question which is frequently asked, which relates to the treatment of VAT and Customs Duties. These are interesting because they concern what people actually pay for the things they buy.
The headline figure to remember is £5.8 billion for what are either directly or indirectly purchase taxes’ as a result of the UK’s membership of the EU.
This isn’t the whole story of course
Is it not extraordinary that the Treasury has never published any summary — that we all can find — on the other payments which the UK makes to the EU. These never appear in the official Government figures for ‘net contributions’, nor are they ever mentioned by the BBC’s “Reality Check” department.
[ Sources: EU Commission | HM Treasury ]
