Energylinx News

October 2013 Monthly Archive

October 31, 2013

Energy Prices, will VAT changes mean a further 15% increase

The focus appears to be firmly on the energy suppliers in terms of why they have increased energy prices over the last few weeks.

Today we read that switching will potentially become quicker, great news as it may encourage more people to switch energy supplier.

But what seems to have been missed by all the politicians and OFGEM is a possible increase overnight of 15% caused not by wholesale energy prices, green policies or profit but simply down to a plan by the European Commission to adopt the following principles:

  • Abolition of those reduced rates which constitute an obstacle to the proper functioning of the internal market. Reduced rates justified in the past can have distorting effects today because the economic, business and legal environments have changed in the meantime;

  • Abolition of reduced rates on goods and services whose consumption is discouraged by other EU policies. This could notably be the case for goods and services harmful to the environment, health and welfare;

  • Similar goods and services should be subject to the same VAT rate and progress in technology should be taken into account in this respect, so that the challenge of convergence between the on-line and the physical environment is addressed.

A consultation was launched on the 8th October 2012 and ended 4th January 2013.

Full details can be found here

You can also find lists of all the respondents here.

What we find amazing is that the UK's response is two pages long and whilst it has a few lines on e-books absolutely no mention is made of attempting to protect the benefit we receive from reduced rate domestic VAT.

The list of respondents does not contain any energy supplier, no consumer group and no OFGEM.

Perhaps no-one troubled to tell them of this consultation but given no argument to maintain the status quo we wonder how long it will be until we are instructed to increase VAT to 20% on our domestic energy bills.

Posted on October 31, 2013 at 11:06 AM