Let's exempt circular businesses from second-hand VAT
Jesper Svarer Nissen, former advisor to Morten Messerschmidt & Founder of Grade A Copenhagen.
The Danes want the green transition - if it's worth it. That's why political action is needed. A good place to start would be a deal with the used VAT - let's exempt circular companies that sell used goods from VAT.
The production of clothing accounts for around 10 percent of the world's total CO2 emissions. That's more than aviation and shipping combined (Information, 2019). And the consumption of clothing and shoes is increasing - in fact, it is expected to increase globally by over 60 percent by 2030.
We therefore need to change our consumption habits, buy less new clothes, buy clothes of better quality that will last longer, and last but not least, instead of buying new, we need to choose more second-hand. Something that, despite the salience of the climate crisis, we are too bad at. 64 percent of Danes do not even consider second-hand when shopping for clothes.
An analysis from Dansk Erhverv from March this year showed that it is especially the expectation of a good price that tempts consumers to buy second-hand. If more consumers are to look in a more sustainable direction the next time their wardrobe needs to be upgraded, financial incentives are therefore a good place to start. Fortunately, there is a low-hanging fruit just waiting to be picked - or rather abolished - the second-hand VAT scheme.
As it is today, shops that sell second-hand clothes almost never buy goods with VAT on them, which makes it difficult to do business on normal terms with purchase and sales VAT. These companies therefore have the opportunity to use the so-called second-hand VAT scheme, where VAT is paid on the profit instead. But why not simply exempt circular business models from this tax? Firstly, VAT has been paid on the product once, and secondly, the second-hand VAT represents a presumably low revenue for the treasury.
Let's lower taxes and fees for companies that use circular business models to move consumption in a greener direction.
