VAT on labour-intensive activities can make repairing broken items too expensive, frustrating consumers who want to avoid waste, according to a new report.
The UK VAT system drives ‘perverse environmental and social outcomes’ and is ‘hampering’ the UK’s ability to cut carbon fast enough to tackle the climate emergency, says a new report by Green Alliance.
The report says that VAT on repair services should be zero-rated to stimulate the repair industry and make repairs more affordable.
This would be popular with the public, according to the Green Alliance, which states two thirds of people in the UK think products are currently too difficult to repair.
High impact, frequently wasted items like electronics, which are a particular problem in the UK, should be prioritised, it says.
e-waste
The UK creates more e-waste per capita than any other country in the world, apart from Norway. In 2019, the UK generated 23.9 kilograms per person, against an EU average of 16.2 kilograms and a global average of just 7.3 kilograms per year.
As part of a wider move towards a circular economy, zero-rating VAT would also help to tap into the employment potential of the repair industry, the report states.
Reforming VAT is an opportunity to show what that means in practice, and zero-rating repairs will have the added bonus of cutting waste and creating new, reliable jobs.
Combined with other policies, there is potential to create 34,000 new jobs across the country as they would be needed in every locality. And a robust remanufacturing sector could support 312,000 additional jobs, which will be much needed to help the UK cope with the impact Covid-19 has had on jobs, it says.
Libby Peake, head of resource policy at Green Alliance, said: “This Brexit boost for the repair industry should be a no brainer for the government at this point. It has repeatedly said that leaving the EU will give the UK freedom to map its own path.
“Reforming VAT is an opportunity to show what that means in practice, and zero-rating repairs will have the added bonus of cutting waste and creating new, reliable jobs.”