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Last Updated: Monday, 3 July 2006, 14:56 GMT 15:56 UK
Brussels in tangle over nappies
Baby in nappies
Europe's birth rate is a sensitive topic for politicians
The European Commission has found itself split on an unusual but peculiarly taxing issue - whether to make babies' nappies exempt from VAT.

The 25-member body is divided on the subject with supporters saying Europe's sluggish birth rate means aspiring parents need no disincentives.

But others argue that nappies are not essential medical products - immune from VAT - and are standing firm.

Previous VAT disputes have involved subjects such as restaurant bills.

'Absurd burden'

According to the Financial Times, tax commissioner Laszlo Kovacs wants to take action against five countries which do not charge VAT at the minimum rate of 15% as stipulated by EU directives.

The offenders are the Czech Republic, Portugal, Poland, Hungary and Malta.

Mr Kovacs has pointed to a recent legal ruling, which concluded that nappies were not considered as medical items which should be immune from VAT, to back up his argument.

A spokeswoman for his office said the price of nappies would hardly be affected by the VAT additions.

But Mr Kovacs is up against a potentially powerful coalition of commissioners which believes that Europe's long-term demographic needs should outweigh the financial benefits of levying the tax.

Social affairs commissioner Vladimir Spidla is leading the opposition to the plan, which will go out to consultation before any moves are made.

"It is absurd to impose a burden on families, especially since nappies for old people benefit from reduced VAT rates," an official close to Mr Spidla told the newspaper.

British parents currently pay no VAT on nappies, based on an agreement at the time of Britain's entry into the European Union.

Nappy wars
27 Apr 06 |  Magazine
What really goes into a nappy?
19 May 05 |  Science/Nature

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