New EU tax bombshell

BRITAIN could face a swingeing rise in VAT and a punishing "green" tax on energy bills under a new EU funding plan, it emerged last night.

You could face paying extra VAT to Brussels You could face paying extra VAT to Brussels

The proposed shake-up would give Eurocrats sweeping powers to slap indirect taxes on Europe’s 500 million citizens to raise more cash for Brussels coffers.

Championed by senior Euro-MPs, the move will mean a further squeeze on the cost of living for millions of UK households. And it comes on top of the prospect of us having to pour up to £4.4billion into an EU bail-out of debt-hit Portugal. Critics last night condemned the plan as yet another attempt by Eurocrats to rob British taxpayers. And they said it will add to the growing support behind the Daily Express crusade to get Britain out of the EU.

Tory MP Douglas Carswell said: “The EU is once again trying to grab yet more power and money. This shows more than ever why we need an in-or-out referendum on Britain’s EU membership.”

Leading figures in the European parliament want to overhaul the EU’s funding system to end the frequent squabbling between national governments over the size of their annual contributions.

They want EU-wide taxes imposed instead to raise the EU’s £110billion annual budget. It would effectively wipe out Britain’s EU rebate, won by Margaret Thatcher in 1984 and currently worth around £5billion a year.

Three senior Euro-MPs put forward the proposals during a sitting of the European parliament in Strasbourg earlier this week. They want £43billion a year to come from a one per cent sales tax and £42billion from a tariff on carbon emissions.

The rest would be funded by taxes on stock exchange and bond transactions, as well as EU investment projects.

Supporters claim the move will be “fiscally neutral”, raising exactly the same amount of revenue as the current system.

But any move to raise sales tax is bound to have the biggest impact on countries like the UK with relatively high levels of consumer spending.

Alain Lamassoure, a French MEP who is head of the parliament’s budget committee, is spearheading the plan. Supporters include Belgian Guy Verhofstadt and German Jutta Haug.

They hope the new system will come into force from 2014.

Mr Verhofstadt said: “It is easy to dismiss this as a dead duck, but it is important to stress that this is not a case of parliament asking for more money. Our proposals will get citizens interested in the EU. Currently, it is only member states and national governments who are interested because citizens pay into national coffers.”

Ms Haug stressed: “Any new financing system should not increase the ­fiscal burden on citizens.” Mr Lamassoure condemned the current system as obscure and undemocratic.

He described the British rebate as “the height of absurdity, a democratic scandal”. He added: “I realise our proposals will unleash a lot of reaction, much of it negative. What we are calling for is a public debate and I accept there has to be a feasibility study to see if our proposals will fly.”

“If we don’t stick our necks out and deal with the debt crisis there will be no EU in 10 years.”

Stephen Booth, of Euro-sceptic think-tank Open Europe, said: “Euro-MPs’ demands for an EU tax are completely unrealistic. The focus should be on reducing the size of the EU budget, not finding more ways to fund it.”

Would you like to receive news notifications from Daily Express?