EU VAT grab - It's all about Ireland

The Telegraph leads with a story today on the EU's proposed reduction from next year of the EU-wide maximum VAT threshold from £85,000 (€95,000) to £76,700 (€85,000). The UK uses the maximum, and has the highest VAT registration threshold in Europe (good for small service businesses). The paper is correct in identifying two effects; first, that under the Robbins Treaty, all firms in the UK will have to comply for the next two years, and second that under the backstop arrangements, the requirement could be permanent in Northern Ireland. Not only would thousands of UK businesses now trading just under the VAT threshold be caught in an onerous EU net, but the change would cause irrevocable harm to Northern Ireland.

Imagine a situation under May's treaty if, in two years, without a trade agreement having been concluded, the UK decided to abolish VAT. Although we would be free to do so in England, Scotland and Wales, all shops, supermarkets, pubs, trains and aircraft and all other businesses selling in Northern Ireland would still have to charge VAT. 

The paper doesn't mention VAT competition between the UK and Ireland. Most VAT thresholds in Europe are substantially lower (Belgium €25k, Germany €17.5k, Lux €30k, NL - nil) but two nations closest to Britain have had to carry split high thresholds - Ireland with €75k for goods and €37.5k for services, and France with €82.8k for goods and €33.2k for services. 

Without a UK veto, the EU can progressively decrease the threshold in Northern Ireland down to about half its current level, allowing the Irish government to increase its tax-take. May's agreement would prevent Northern Irish businesses from taking advantage of any reductions in VAT rate or increase in thresholds in mainland Britain after Brexit. 

Just another trap set by the EU and willingly incorporated by May's muppets in Team Robbins. 

However, it would all go to buggery if we left without a deal in March. We could then abolish VAT if we wished across the whole of Britain - including Northern Ireland. The DUP would have to be literally insane to move even a millimetre in placating May's government on the Robbins treaty.