2006RUS

As a business owner you may already be aware that VAT has been reduced to 5 percent already in some fields of business in the UK. The Government, in fact, has been gradually reducing the rate from 1998 onwards until it reached 5 per cent for installation by professional installers of some energy-saving materials. Insulation installation also benefitted from this break. This VAT rate reduction reveals an appreciation of the incentivizing powers of this option. Homeowners, however, remain excluded from the benefits enjoyed by professional installers, should they opt to do the installation work on their own. The environmental benefits of the UK government reducing VAT on all insulation work to five percent would also benefit excluded classes, including homeowners.

One group left out is the householder. Yet, under the credit crunch and falling market price of houses era we face, householders are likely to go the do it yourself route. Not surprising the Construction Products Association has seen the light and said it supports the extension of the reduced rate to those who decide to do renovations this way.

One can point out the thermal insulation market has been growing due to favorable regulation and rising energy prices. In 2007, the thermal insulation market in Europe was a 30 billion Euro market. A reduced rate of VAT on thermal insulation would enhance the demand for such products. The possible impact is illustrated by the results of a temporary campaign mimicking VAT exemption, which led to an increase in sales by 120 percent. The reduced rate of VAT, could lead tones of CO2 reduction per year. A study commissioned by the EU commission has stated that a reduced VAT rate for thermal insulation is a potentially effective instrument.

The Construction Products Association has stated that many householders are capable of installing insulation themselves and yet they are paying the full rate of VAT on a product the Government must want to encourage them to buy. It is known that buildings are the largest single energy-using sector, accounting for 40 percent of energy consumption in Europe. Insulation is a highly cost-effective end-useful measure in reducing the emissions of green house gas emissions.

A study commissioned by EU has found that a reduced VAT rate on insulation products might not be passed through fully by installers to the consumers. Despite the rate cut for commercial installation, this is one reason it has been surmised why the uptake in the UK market has been low. This is because since the installer purchases the product on behalf of the residential customer, the reduced rate may not be clearly apparent to the end consumer. Of course, when the residential owner is the installer, this is not the case.

The tax revenue increase of a reduced rate in the Isle of Man indicates the economic benefits that may be achieved. There were also improvements in the current stock of housing and a reduction of pressure on development of green field sites. Yet, the UK government has not learned from the example of the Isle of Man. Were the Government to change its policy, it would signal the Government supports the role of consumers doing their part to help the environment this way, as they also help their own checkbook. Such action would encourage sustainable consumption. Installation of insulation reduces the use of heating fuels and the resultant savings are beneficial from the perspectives of both environmental impact and economic gain.

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In order to explore the historical facts about an old taxation system on windows in the United Kingdom, read on. The window tax was a tax which was introduced into the United Kingdom in the late 17th century by King William the third. He was finding it hard to find a way to tax people based on their income or wealth because many people refused to tell the king how much they earned. They felt it was a completely private matter and certainly no business of the King.

To find a way to tax them based on some sort of wealth measure, the King decided to tax his subjects depending on the size of house they inhabited. Each householder was to pay a flat rate of 2 shillings. Then in addition to this, each person with more than 10 windows in their dwelling would pay extra tax.

For a property which had between 10 and 20 windows the householder would pay an extra four shillings on top of the base line 2 shillings. For a property with over twenty windows, the window tax was 8 shillings extra. In later years, the minimum number of windows which would be taxed was reduced to 7. In 1825, a house with a minimum of 8 windows was to have an extra tax imposed.

Poor subjects who were eligible for the church’s charity could claim an exemption. This was irrespective of the number of windows their dwelling contained.

However, in the 17th and 18th centuries, many larger houses could be seen with bricked up windows. This is an obvious attempt to avoid this window tax. In Scotland, after William Pitt the Younger introduced this tax in the 1780s, the windows were painted black with white frames. This was also done in order to avoid paying the tax. These popularly became known as Pitt’s pictures. Examples of these windows can still be seen in Charlotte Square in Edinburgh.

Many of the more wealthy families of the time were thought to show off their wealth by having houses of many windows built. They may even have had extra windows put in were walls existed to prove that they could afford to pay the tax.

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