The UK's Parliament has an odd mechanism called an 'Early Day Motion' (EDM). These are explained in detail here. What they really do is give MPs an opportunity to express concern on an issue, publicly. They are rarely debated, but if they are often noticed by policy makers.
The following EDM has just been tabled:
That this House notes with concern the estimated £80 million or more of VAT lost to HM Treasury each year as a result of the use by major retailers in the UK, and elsewhere, of the Channel Islands as a location for selling Cd's and DVDs ordered on the internet and previously imported into those locations from the UK for the specific purpose of returning them to customers in the UK without VAT being charged; believes that this practice undermines the credibility of the UK's VAT system, and the viability of the UK's independent music stores, all of whom are accountable for VAT on the sales that they make; threatens the livelihoods of the several thousand people who work in those stores and creates an environment in which compliance with the taxation laws of this country is seen as an optional exercise; and calls on HM Treasury to take the necessary steps to curtail this activity, including making application to the European Union to reduce the value of goods which may be imported without VAT being charged to £7 from the current limit of £18.
I am pleased to have had a hand in drafting this EDM. There is systemic abuse of the tax system going on which Jersey is not really stop[ping (it has, for example, done nothing to challenge the actions of Play.com which is a major player in this trade). The UK government has said it will close down this loophole, but it hasn't. Now is the time it did.
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Surely it will cost customs more to process each item than the extra £1.64 recovered in VAT… Thus the tax burden on everyone goes up?
I sympathise with retailers who are suffering as a result of the VAT “loophole”, however we live in an increasingly global marketplace, and I doubt that artificially propping up the old tax systems is a sustainable way of “controlling” free markets in this day and age…
Perhaps a more integrated pan-european VAT system.
Alex
Two things. First of all, Jersey is abusing this from outside the EU, so EU reform will not solve this.
Second, unrestrained markets do not provide optimal solutions. In this case, destroy the UK retail sector for CDs and you destroy the market for many small bands, etc who are completely uninteresting to the major retailers on Jersey. That’s a loss to our cultural life that far outweighs any cost of tax admin. This is a price worth paying to protect us from that global market, just as it’s a price worth paying to stop drug trafficking and so on.
Tax abuse will destry society as we know it. That’s the point here.
Richard
[…] This was in the Jersey Evening Post today. I am pleased to say that I helped draft the EDM in question. […]
[…] Another way to persuade tax brigands to mend their ways is to make it economically unpleasant for them to operate. That is exactly what HMRC is threatening to do to Jersey. People on Jersey will lose their jobs over this. I have little sympathy. This is the result of work done by Richard Murphy and others in raising an Early Day Motion that pointed out £80 million a year is lost to HMRC this way. […]