Business of the House

Henry Smith Excerpts

Thursday 27th May 2021 Commons Chamber

[Henry Smith (Crawley) (Con) [V]]

Now that the UK has left the EU, we are free to change the VAT system and introduce a new sales tax regime, possibly localised, which will put downward pressure on taxation. May we have consideration of a debate on ending VAT and introducing a more flexible sales tax system?

[Mr Rees-Mogg]

I agree with my hon. Friend about the importance of our new-found freedoms from the EU to set taxes how we please. We are no longer bound in to a complex agreement with the European Union and can therefore have our own competitive tax system. I am certainly intrigued by his idea that we should have local competition in tax systems, which they have in the United States, where some States have high sales taxes and others have lower sales taxes, and so on. It may be more difficult in a relatively small island, but it is worth noting that VAT is a broad-based tax on consumption designed to ensure the fair treatment of both consumers and businesses, and has been adopted not just in the European Union but by, I think, 170 countries. It may be that going away from VAT would not just be a statement of our Brexit independence, but go against a system that actually works quite well globally.