Responding to a call for feedback by the European Commission, Ecopreneur.eu reiterates that a modern EU business taxation framework should make best use of two key levers to drive the transition to a circular economy: a tax shift from labour to resources and, as part of that, a temporarily reduced Value Added Tax (VAT) on targeted products and services.
Given the choice between two otherwise equal goods or services, even a moderate VAT difference can effectively nudge consumers to purchase the circular option rather than the linear one.
Ecopreneur.eu therefore urges the European Council to adopt majority voting on certain tax matters instead of unanimous voting with the right of veto, and then further discuss and adopt the VAT reform proposal.
In the meantime, member states governments can already now set low VAT rates for certain repairs, second-hand goods and charities within the scope of the current VAT Directive.
Read our full feedback to the European Commission.