VAT is applied throughout the EU, but not always in the same way. A member state can choose to apply a reduced rate to certain categories and there is a history of charging low rates on garden plants. The rationale is a bit unclear but presumably it's because some countries wish to encourage their people into gardens because they recognise that activity as one good for the nation.
Perhaps they recognise that having more plants in gardens is good for the environment, promotes biodiversity, reduces air and noise pollution and creates a feeling of well-being. Perhaps they also recognise that the very act of gardening is good for their citizens and all this increases if VAT is lowered.
Whether or not it works, quite a few EU member states give it a go. The rate on plants is just six per cent in Belgium, Holland, Luxembourg and Portugal, seven per cent in Germany and 10 per cent in France. In fact, the UK is in the minority of member states that apply the standard rate of VAT to plants.
Does a lower rate of VAT encourage plant buying and, if it does, do plants really bring all those benefits? It seems obvious that lower consumer prices will increase the number of plants bought and if anyone needs proof it's easily found. A few years ago in Portugal, the rate on plants was raised from six per cent to its standard rate and plant sales fell dramatically. The rate has now been reduced back to six per cent and sales have recovered.
So the only question remaining is do plants and gardening really bring those benefits? If we really believe they do, then perhaps we should be lobbying Government to lower the rate of VAT on plants.
Tim Edwards is chairman of Boningale Nurseries