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PRESCOTT WANTS VAT LEVY ON NEW HOUSES

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Environment secretary John Prescott is urging chancellor Gordon Brown to tax house-building to help the government'...
Environment secretary John Prescott is urging chancellor Gordon Brown to tax house-building to help the government's campaign to protect the countryside, according to The Daily Telegraph (p1).

Mr Prescott wants VAT charged on materials and labour used on new properties. This would be balanced by cutting tax on converting derelict buildings to encourage the regeneration of cities.

VAT at 17.5% is charged on refurbishment. New building is zero-rated. Ministers are considering a harmonised rate, probably 7.5%.

The proposal has been supported by the urban task force and the cabinet office's performance and innovation unit.

Another option being considered by the treasury is to set up a 'greenfield tax' for new properties in the countryside, which could be challened into a tax break for people moving into poor inner city areas.
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