Recommendation 24

HM Government Not Addressed

The Government is considering a wide range of policy levers to support its commitments to doubling resource productivity and eliminating avoidable waste by 2050, as well as contributing towards Net Zero. The intended outcomes of future policy are to require products to be designed to be more durable, reparable and recyclable, and increase ease of remanufacture, as well as requiring information on the resource efficiency of products including environmental impact across the lifecycle, repairability and recyclability. The Government will also consider to what extent modulated fees could be introduced to the WEEE system to encourage producers to design their products in a more resource efficient way. VAT is a broad-based tax on consumption with the standard rate of 20 per cent applying to most goods and services. Exceptions to the standard rate do exist, however these have always been strictly limited by legal constraints and fiscal considerations. Whilst the rationale of reducing VAT on repairs is appreciated, this must be viewed in the context of over £50 billion of requests for relief from VAT since the EU referendum and in response to Covid-19. As Budget 2020 acknowledged, VAT and excise make a significant contribution towards the public finances. VAT raised around £130 billion in 2019/20, and helps fund the Government’s priorities including on health, schools, and defence. Any loss in tax revenue would have to be balanced by a reduction in public spending, increased borrowing or increased taxation elsewhere. Given this, although the Government keeps all taxes under review, there are no plans to change the VAT treatment of electronic items at present.