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Deal reached to scrap 'tampon tax', officials say Deal reached to scrap 'tampon tax', officials say
(about 1 hour later)
Prime Minister David Cameron has secured support from other EU leaders to allow the UK to scrap the so-called "tampon tax", British officials say. EU leaders have agreed a deal that will allow the UK to scrap the so-called "tampon tax", British officials say.
The deal would offer the flexibility that would allow the UK to introduce a zero rate of tax on sanitary products. Two options have been put forward that would permit a zero rate of tax on sanitary products.
It comes after pressure on the government from Eurosceptic backbenchers following the Budget. It comes amid the threat of a backbench rebellion following the Budget from Eurosceptic MPs over the tax, currently at the lowest rate allowed by EU law .
Chancellor George Osborne had pledged to spend the proceeds of the tax on women's charities.Chancellor George Osborne had pledged to spend the proceeds of the tax on women's charities.
VAT is currently charged at 5% on sanitary products - the lowest rate allowable under EU law. VAT is currently charged at the reduced rate of 5% on sanitary products - but more than 300,000 people have signed a petition calling for sanitary items to be exempted from tax altogether.
More than 300,000 people have signed a petition calling for sanitary items to be exempted from tax altogether. At the European Council summit in Brussels, the 28 leaders agreed a statement welcoming "the intention of the Commission to include proposals for increased flexibility for member states with respect to reduced rates of VAT, which will provide the option to member states of VAT zero-rating sanitary products".
BBC chief political correspondent Vicki Young said it appeared the government had managed to avoid a Commons defeat by reaching the agreement.BBC chief political correspondent Vicki Young said it appeared the government had managed to avoid a Commons defeat by reaching the agreement.
'Good progress'
Earlier Mr Osborne said he hoped to announce it would be scrapped altogether "in the next few days".
A number of Conservative MPs have threatened to vote for an amendment to the Finance Bill in the Commons on Tuesday to allow the zero-rating of women's sanitary products.A number of Conservative MPs have threatened to vote for an amendment to the Finance Bill in the Commons on Tuesday to allow the zero-rating of women's sanitary products.
Earlier Mr Osborne said he understood people's anger at the tax, and said politicians were "on the verge" of a deal to reduce it zero.
Those campaigning for Britain to leave the EU in 23 June's referendum have been keen to highlight the role of Brussels in setting VAT rates.Those campaigning for Britain to leave the EU in 23 June's referendum have been keen to highlight the role of Brussels in setting VAT rates.
Conservative MP Anne-Marie Trevelyan said: "I fear it may just be a statement that the EU is going to look at how we do VAT within nations - which isn't good enough. This is something that needs to be sorted out." Mr Cameron raised the issue with European Commission president Jean-Claude Juncker at the start of the EU summit, Downing Street said.
Mr Osborne, who wants Britain to stay in the EU, told the BBC Radio 4 Today programme: "I perfectly understand people's anger at paying the tampon tax. Labour MP Paula Sheriff, who has tabled the Finance Bill amendment, said: "Women's sanitary products are not a luxury. George Osborne failed to take the opportunity in his Budget to say that he would take the action called for by Labour and feminist campaigners and seek to get the 'tampon tax' abolished."
"I said we would get agreement that we could reduce this rate to zero. I think we are on the verge of getting that agreement. I think we are going to get that agreement in the next few days, we hope."
Prime Minister David Cameron raised the issue with European Commission president Jean-Claude Juncker at the start of the EU summit currently taking place in Brussels, Downing Street said.
Labour MP Paula Sheriff has, meanwhile, tabled an amendment to the Finance Bill that would scrap the so-called "tampon tax". Labour will back the motion, which it said was attracting cross-party support.
She said: "Women's sanitary products are not a luxury. George Osborne failed to take the opportunity in his Budget to say that he would take the action called for by Labour and feminist campaigners and seek to get the 'tampon tax' abolished.
"But we now know that the European Commission is on the verge of offering the opportunity to do just that. George Osborne should work with Labour MEPs and other EU member states to ensure that this unfair tax is abolished once and for all."
VAT 'exception'VAT 'exception'
The European Commission said it was working on two options that would allow member states more flexibility over setting VAT rates.The European Commission said it was working on two options that would allow member states more flexibility over setting VAT rates.
A Commission spokeswoman said: "The Commission is aware of discussions in the UK regarding VAT rates on sanitary products. A Commission spokeswoman said: "EU VAT rules are not imposed by the European Commission. They are decided on and agreed unanimously by member states.
"EU VAT rules are not imposed by the European Commission. They are decided on and agreed unanimously by member states.
"Contrary to some media reports, tampons do benefit from reduced taxation.""Contrary to some media reports, tampons do benefit from reduced taxation."
She added that under current rules, member states were not allowed to apply a zero VAT rate to a product unless all other member states agreed.She added that under current rules, member states were not allowed to apply a zero VAT rate to a product unless all other member states agreed.
"Zero rates are an exception and run against generally accepted VAT principles. Most Member States tax sanitary products like tampons at around 20% or more," she added. "Zero rates are an exception and run against generally accepted VAT principles. Most member states tax sanitary products like tampons at around 20% or more," she added.
The Commission will next week set out two options to give member states more freedom to apply zero rates.