Government Public Bodies will have to pay VAT says EU

Wednesday the 2nd of August 2006

The EU Commission has given Ireland two months to ensure VAT is paid by all public bodies. They say that government departments and local authorities should be treated as taxable persons where doing otherwise would result in significant distortion of competition. This is good news for the private sector who have been at a disadvantage as their public body competitors often charged the public the same price including VAT but did not pass it on to the Revenue thus creating a higher margin than a real competitive market would tolerate.
This ruling will create a true discipline of market forces in state bodies. Assertions that the EU decision will raise prices are fatuous as the private operators competing against public bodies are more likely to give more cost effective service to the consumer.