Liberal Democrat peer Lord Greaves tabled a question in the house earlier this month asking for the two emergency services to receive the same tax relief as the RNLI.
"It seems ridiculous that the service, which, if the Government had to step in and replace it, might cost £6m a year, is subject to VAT on its equipment, when the equivalent service, the Royal National Lifeboat Institution, is not," he said.
The RNLI receives VAT relief only on the purchase of lifeboats and other supplies used for emergency purposes, but not on all expenditure.
Fellow Liberal Democrat Lord Addington said that if the Government could not provide tax concessions to help volunteers buy the right equipment to save lives, then it had "really lost the plot".
Government minister Lord Davies of Oldham said there were difficulties granting an exemption to VAT because of EU law. But Lord Greaves said he believed the Government could win an exemption if it pressed the EU for it.
Andy Simpson, a volunteer with Mountain Rescue, told Third Sector that his organisation had to pay about £200,000 a year in VAT.
The Government could give Mountain Rescue an annual grant equal to the cost of VAT rather than going through the EU, he said, but it had refused to do so.