Editorial: When it comes to VAT, the gloves are off

Stephen Cook, editor

In our world of 24-hour news and obsession with celebrity, it's rare that anyone makes progress on difficult issues by quiet lobbying behind the scenes.

For example, the Government wouldn't have anything to do with the proposal for a children's food bill to tackle the problem of unhealthy food in schools. But when Jamie Oliver sauntered down Downing Street with his petition and grinned at the cameras, we had the School Food Trust in a brace of shakes, with added Big Lottery Fund money.

And Sir Bob only had to toss his shaggy grey locks, it seems, for Gordon Brown to agree to a refund of VAT on sales of last year's Do They Know It's Christmas?

The latter case seems to have played a key part in the decision by the Charities Tax Reform Group to abandon its policy of trying to achieve reforms in the VAT system for charities by tugging discreetly at ministerial sleeves and talking in restrained terms in public.

The group has come to the conclusion that this approach has made it possible for the Treasury - never a department to let go of cash without a struggle - to confine itself to empty reassurances and precious little action.

So the group is taking the gloves off and will be coming out fighting.

It's unlikely that we will witness teams of policy wonks brandishing banners and scaling Nelson's column, but brace yourselves for some pretty hard-hitting invective.

The group's new campaign is timed to coincide with Britain's presidency of the EU, which starts at the beginning of next month. VAT had hardly been heard of in this country before Britain joined the EU, and Brussels is indeed one of the best places to apply pressure. The essential thrust of the campaign is that VAT for charities has never been properly thought out on a principled basis, that the existing system is arbitrary and unfair, and that it's time for real reform. The detail is infinitely complex, but the bottom line is that charities are carrying an unfair burden of some £500m.

Our week-by-week reporting of the charity VAT story has also led us to the conclusion that it's time for ministers to focus their minds and bring the operation of this tax in line with headline Government policy on the voluntary sector - in particular, the manifesto commitment that the sector should be able to compete for contracts on a level playing field with the private and public sectors. So the campaign can count us in.

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