Price of stamp to increase by 8 cent under EU plan
EU Tax Commissioner Frits Bolkestein insisted the proposal should not have any significant effect on consumer costs, because customers already pay hidden VAT on their post office transactions. His VAT plan is designed to end unfair competition between the traditional public sector suppliers, such as An Post, currently exempt from VAT, and private competitors, which have to charge VAT.
“The proposal would make the VAT system fairer and level the playing field for all operators, leading to improved postal services for everyone,” Mr Bolkestein said.
The plan was slammed by Labour MEP Proinsias de Rossa, who said it would hit ordinary consumers and threaten the viability of An Post. Mr de Rossa believes the cost of stamps would go up dramatically. He said as a result of the pro-liberalisation policies pushed by Mr Bolkestein and the commission’s internal market directorate-general over the past decade, companies such as An Post find themselves operating in an increasingly competitive market.
“Consequently, they are unlikely to pass on any cost savings to customers. The commissioner well knows this and has included in his proposals provisions that allows member states to apply a reduced rate of VAT to postal services,” he said.
He estimates VAT would see the cost of an ordinary stamp rising by between four and eight cent, the cost of a priority letter to Britain by between five and 10c, and the cost of sending a large package (over 2kg) to anywhere on the continent by 3.36c, from 16c at present. An Post spokesman John Foley said the move was “bad news for us and for the consumer”.
EU member states must agree unanimously to any changes to tax, including VAT rates. The matter may be discussed by the finance ministers at their monthly meeting next week.
