Labour MEPs have called on the government to scrap the five per cent tax rate on sanitary products and renewable energy, following the European Commission's publication of its VAT action plan today.
Under the proposals, announced today by tax commissioner Pierre Moscovici, the UK government would be in a position to set a zero per cent rate on key products, including sanitary products and renewable energy.
The VAT action plan offers two proposals to ministers to reform VAT in the EU: the first proposal would allow the UK to push for renewable energy products to be added to the current list of exempted products; the second proposal gives the UK power to abolish the list completely and set its own rate of VAT, including a level of 0%.
Anneliese Dodds MEP, Labour's European Parliament spokesperson on tax, said:
"The announcement today paves the way for George Osborne to scrap both the solar tax and the tampon tax as soon as 2017. This announcement is testament to the hard work of campaigners here in the UK and those working to reform the EU from within.
"It is crucial the chancellor resists the temptation to increase VAT on renewables to 20% in the time before these new rules come into place - he must at the very least assure the UK renewable energy market he will offset any rise in VAT with appropriate compensation."
Neena Gill MEP, member of the European Parliament special committee on tax, said:
"Today's announcement by Commissioner Moscovici that countries should be free to choose which properties to tax at what rate through VAT is good news. This is a significant event for those who have campaigned for a 0% rate for sanitary products and renewable energy - it is quite frankly ridiculous that VAT is charged on items such as tampons.
"The VAT action plan is a fine example of the EU bringing about sensible reform - and the onus is now on Mr Osborne to act where previously he has failed to do so.
"More generally speaking, this demonstrates clear EU action on tax matters, and through my work on the tax committee I will be seeking to maintain the momentum from this action plan in dealing with the fallout from the Panama Papers affair and ensuring a transparent approach to corporate tax matters."
Theresa Griffin MEP, Labour's European Parliament spokesperson on industry, research and energy, said:
"This government's record on climate change has been wholly inadequate and includes cuts of more than £1bn to carbon capture and storage. Osborne has the opportunity to reduce tax on solar panels and support efforts to reduce climate change.
"Reducing VAT on solar panels will help incentivise industry and consumers to produce and purchase at lower costs. Right now the government is not on track to meet its 15% renewable energy target by 2020. This Labour proposal reaffirms our commitment to tackle climate change and support industry."
Mary Honeyball MEP, Labour's European Parliament spokesperson on women's rights and gender equality, said:
"The EU VAT action plan is a real step towards scraping the outdated and unfair tampon tax. Tampons and other sanitary products are essential items for many women and they should not be subject to VAT.
"As well as abolishing the tampon tax, the government must work to eradicate the so-called 'pink tax' - where retailers charge women more than men for almost identical products."