Taxing at a high rate can have substantial consequences for consumer demand for cut flowers. Fiscal borders between EU countries were, in theory, eliminated from 1 January 1993 onwards. However, in practice, harmonisation of VAT (tax levied at consumer sales’ level) rates has not yet been achieved.
- When France increased its VAT rate, it caused a 20% loss of sales. Lately, France has gone back to the reduced rate of 5.5%.
- In the UK, the VAT rate was reduced from 17.5% to 15% in December 2008 to stimulate consumer spending and, consequently, the economy. The VAT rate will be reviewed again in December 2009.
Source: European Commision (2009)