After the earthquake in Haiti three months ago, which killed around 230,000 people, Simon Cowell and a team of singers produced a single "Everybody Hurts" to raise disaster relief funds. Fantastic thing to do!
The Prime Minister said that VAT would be waived on the single. Fantastic thing to do!
It wouldn’t quite be true to say he was telling lies, but he was certainly bending the truth. The Treasury has warned the Dept of International Development that they will have to pay for the lost revenue. Its budget will have the VAT deducted from it.
This means that money otherwise destined to fulfill its purpose of aiding some of the poorest people in the world will be diverted to the Treasury. Aid groups have, quite reasonably, accused the Government of penny-pinching.
Malcolm Bruce, chairman of the International Development Committee, said Brown had been disingenuous and deceitful in claiming the VAT would not be claimed by the Treasury. "Anyone going out to buy this single would have thought it was adding value to the campaign and the very fact of cancelling VAT was designed to increase the numbers buying it," he said.
The Treasury has confirmed that the equivalent of the VAT would be taken out of DfID’s budget. This means that all the money raised from "Everybody Hurts" will go to the Haiti relief effort. Then they did what they always do when they get caught out. They blamed someone else. In this case the EU. A spokesman for the Treasury said that they couldn’t, under EU law, exempt things from VAT. It has to be collected – in this case from the DfID budget."
So why did Mr Brown promise that no VAT would be payable on the single? Did he not know, after all these years as Chancellor what the EU law was on the matter of VAT? Did he think that people buying it would be happy that their generosity was taking money away from people in countries like Malawi?
Now Downing Street has intervened to cool the row. It appears that Dfid will indeed reimburse the initial cost of the VAT for the single but has an agreement with the Treasury that they will provide additional end of year financing to cover that cost. Talk about a waste of time!!
Sounds like Brown wanted to make a big gesture and that, like most of what he does, it has fallen flat on its butt and left him looking mean and stupid and opportunistic.