The European Commission has published proposals under which European Union member states could lower rates of value added tax on many locally provided services.
Studies showed that reduced VAT rates on local services were not likely to distort competition or harm the 27-nation's internal market, the EU executive said.
EU Tax Commissioner Laszlo Kovacs is seeking to turn a patchwork of temporary permissions to levy reduced rates on various goods and services into a more coherent approach so that all countries have the opportunity to levy reduced rates on the same goods and services if they want to.
The standard VAT rate is 15 per cent and unanimity will be needed among all EU states to adopt Mr Kovacs' draft law.
France and Britain have been pushing Mr Kovacs to include energy efficient goods in the list that can benefit from reduced rates.
"The Commission will present the results of its analysis, accompanied by relevant proposals and recommendations in the autumn, together with proposal to address the appropriateness of eliminating reduced rates for environmentally prejudicial products such as pesticides," the draft law said.
Under Mr Kovacs' proposal:
- the option for introducing reduced rates would be extended to the whole housing sector with any reference to social policy deleted. It would also include renovation, repairing and cleaning;
- minor repairs to bicycles, tricycles would be covered;
- restaurants and catering services would be included - a long-standing demand of France;
- locally supplied labour-intensive services would be extended to include gardening and landscaping;
- general cleaning, ironing, laundering would be included;
- personal care, hairdressing, beauticians would be included.
The proposal would also have amendments to allow continued reduced rates on some goods - such as children's nappies, audio books and equipment, and appliances for the disabled - a step Ireland, Hungary, Poland and Britain will welcome.