The UK government will support a Budget amendment tabled by the Labour Party to scrap a proposed VAT hike on solar panels.
The Labour amendment seeks to spare solar panels, wind turbines, hydropower equipment and energy efficiency products from a VAT rise from 5% to 20%.
The move is designed to head off a rebellion by Conservative Party backbenchers, a number of whom had threatened to vote with the opposition following Tuesday’s debate.
The backbenchers are irked by what they see as an erosion of tax powers after the European Court of Justice last year ruled that Britain’s reduced rate of VAT on energy-saving products was in breach of European Union laws.
A spokeswoman for the Prime Minister tweeted: “Govt [sic] won’t seek to oppose amendments to Budget calling for tampon tax to be scrapped – or for reduced vat on solar panels.”
Ecotricity founder Dale Vince said: “The proposed hike in VAT on household solar and wind installations would have cost further jobs in an industry battered by government cuts – and stood in stark contrast to the new subsides for the oil and gas industry announced in the budget.
“This a is a welcome U-turn in a budget punctuated by skid marks.”
Image: George Osborne (HM Treasury)
UK heads off solar VAT rebellion
Government to support Labour Budget amendment scrapping tax hike
By EBS