• Chancellor Nigel Lawson has written to the Bus and
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Coach Council to repeat assurances made by the Prime Minister during the election campaign that Britain will fight EEC moves to abolish the zero VAT rate on PSV fares.
Lawson says: "The Prime Minister has made the position perfectly clear — decisions on the proposals will require the unanimous approval of member states, and the Prime Minister has already given a firm commitment to reject any proposals which would restrict our ability to use zero rating."
A spokesman for the BCC says it is vital that the zero rate is retained. Unlike a tax exemption, a zero rating allows an operator to claim back tax. Any VAT imposition could result in an absolute fares increase for passengers at a time when the PSV sector is still finding its feet following deregulation.