8 pct VAT may be extended

Brussels – The European Commission yesterday decided to propose extending until the end of 2005 the scheme of reduced value-added tax (VAT) on certain professions that are seen as creating a large number of jobs. The measure, first adopted in 2000, was part of an experiment to see whether a reduced VAT rate (8 percent instead of the usual 18 percent) on certain services could boost employment in sectors and jobs not requiring a great deal of professional trading. The experiment was to expire at the end of this month. Each member state could choose one or two professional activities from a limited list on which to apply reduced VAT for the services offered. Nine out of the 15 EU members, including Greece, chose to do so. Greece is participating with two professions, the mending of clothes (except leather items) and home care for children, the elderly and the bedridden. It is still open to inquiry, however, whether any of those involved in the above professions has ever issued a receipt and whether VAT has been paid. Some members want to expand the list of professions that pay lower VAT. France, for example, wants to include restaurants, claiming it is an important cultural matter as many of its biggest restaurateurs face bankruptcy. Greece wants to reduce VAT on motorcycle helmets but the Commission is unlikely to agree because this does not increase employment in a labor-intensive sector.