BfB, one of the Eurosceptic campaign groups, is running with a story that “UK pays nearly a fifth of all VAT that goes into the EU budget”. Actually the UK pays 13.9% of the EU’s VAT contribution but accounts for 14.4% of the EU’s gross national income (GNI). In other words, the VAT contribution paid by the UK is marginally lower than what we might expect for its economic size.
Looking at the EU’s most recent published annual financial figures, which are from 2013 [the figures for 2014 still need to be audited], we see that on the tab for 2013, the total VAT resource for the EU (box G72) was €14,019 million and that from the UK (box AI72) was €2,527 million – or 18%. This does not take into account the UK rebate, which is calculated on the basis of the UK’s VAT and GNI percentage contributions.
The UK rebate in 2013 (AI74) was €4,329 million, of which 13.47% or €583 million was discounted from the VAT contribution. The real VAT contribution was therefore €1,944 million out of €14,019 million or 13.9%, some way below “nearly a fifth” and very reasonable when we consider that the UK accounts for 14.4% of the EU’s economy.
In its paper, BfB omits to note that the VAT precept is tiny and worth just 0.3% of VAT and that the EU budget itself is likewise tiny and worth just 1% of GDP or 2% of total public spending. It is time for a more open debate about the future of the EU budget.