VAT questions?

Question

I recall that VAT was introduced in the UK in the mid 70's

First question is, what form of duty/tax existed before VAT was introduced (like US stylee 'sales tax' for instance)

Also was it the UK that imposed VAT on the common market (EEC etc) or was it the EEC that imposed VAT on the UK

Answer 1

Before VAT there was 'Purchase Tax' but as I recall it was only on what were classed as 'luxury' items, and not day to day essentials.

Vat started off at 10% if I remember correctly, it was probably imposed by the EEC but I'm not sure.

Answer 2

Yes, it was purchase tax which was the basic tax on expenditure before VAT was introduced. Purchase tax was paid by the manufacturers rather than being collected from retailers.

The EEC had already adopted VAT so we had to do the same when we joined. The aim was to harmonise taxes across the EEC but we still seem a long way from that ideal.

Answer 3

Just for further information, after the 10% tax rate there were then two rates. One continued for luxury goods which at thew time might have been 15% but just possibly 20% and the lower rate I think was 5%.

It all seems a long time ago now.

Answer 4

seem to think we also had retail tax,the ECC (as it was then )imposed VAT at the standard rate of 10%,the utilities(gas water electric) where at first exempt, as where children clothing