State rejects EU plan to tax clothes

THE Government said last night it would reject any attempts by the EU Commission to introduce a tax on children’s clothes and shoes.

Parents would pay more under the EU strategy which is part of Brussels' attempts to simplify VAT rates.

However, both Government and opposition politicians say over-stretched parents are already struggling to meet the spiralling cost of living.

EU finance ministers are due to discuss the issue at a meeting in September.

In 1981, the then Fine Gael minority Government fell after introducing a tax on clothes and shoes in the budget. The Coalition Government insisted last night the proposal would not be adopted.

"If they do adopt it, it will require approval by the Council of Finance Ministers. It can only be approved by unanimity and we, like the UK, are not prepared to accept it," a spokesperson said.

"It is precisely because of proposals of this nature that the issue of maintaining unanimity in all taxation matters is of such significance to us. Our determination to ensure that such matters are decided only on the basis of unanimity is absolutely resolute."

The chances of the plan being rejected are high, as it would require unanimous endorsement within the European Commission when it is debated in September, said Fine Gael's finance spokesman, Richard Bruton.

"I couldn't see a change in our policy on the matter," said Mr Bruton. "I don't see it as a runner. Countries are always pressing for tax harmonisation. But Ireland has always taken a strong view on this and has opposed such moves. But the country is running short of cash and Charlie McCreevy might see this as a handy little way of gathering up money, while at the same time having the EU to blame for the change in policy."

Labour's Joan Burton said the Finance Minister had remained very quiet on the issue despite her questioning about VAT harmonisation across the EU and its extension to the postal service in particular.

"In the context of our rising prices, any VAT change on children's clothing and footwear would represent another significant hike in prices and would put a huge strain on the budgets of ordinary families with children.

"The Government has been silent, extremely silent, on this one.

"We have one of the highest VAT rates in Europe and any move to introduce VAT in such a sector would have a dreadful impact on families," said Ms Burton.

She said she would also be keeping a close eye on proposals to introduce VAT on postal services, following numerous representations from charities and missionary organisations.

Several such groups depend a lot on the postal service to canvass for funds. And any VAT hike could not be recouped by the many organisations which simply are not registered for VAT, she said.