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Energy: VAT

Volume 702: debated on Monday 23 June 2008

asked Her Majesty's Government:

How VAT receipts on each of (a) road fuel, (b) red diesel, (c) gas and (d) electricity are used; whether the European Union takes money from VAT income; and, if so, whether it is a sum fixed for each year in advance. [HL4248]

The Government do not hypothecate revenues from VAT on road fuel, red diesel, gas and electricity. Revenue from taxes is pooled so that the spending it finances can be prioritised across the range of government activities in the most efficient way.

VAT-based contributions to the EU budget are not paid directly from the VAT revenue that is collected in the UK. Rather, the contributions are made against a VAT base assessed in a common manner in all of the member states.