Do away with used VAT
By Jesper Svarer
founder of Grade A Copenhagen, former advisor to Morten Messerschmidt, Skelmosevej 10, 2500 Valby. jespersvarernissen@gmail.com.
Transition : The Danes want the green transition - if it's worth it.
Therefore, political action is needed.
A good place to start would be a deal with the second-hand VAT - let's exempt circular businesses that sell second-hand 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 longer, but not least, instead of buying new, we should choose more secondhand. Something that, despite the salience of the climate crisis, we are too bad at. 64 percent of Danes do not even consider secondhand when shopping for clothes.
An analysis from the Danish Chamber of Commerce from March this year showed that it is especially the expectation of a good price that tempts consumers to buy used.
If more consumers are to look in a more sustainable direction the next time they need to update their wardrobe, financial incentives are a good place to start. Fortunately, there is a low-hanging fruit just waiting to be picked - or rather abolished - the used VAT scheme.
As it stands today, shops selling second-hand clothing almost never purchase goods with VAT on them, making it difficult to do business on normal terms with purchase and sales VAT. These companies therefore have the option of using the so-called second-hand VAT scheme, where VAT is paid on the profits instead.
But why not simply exempt circular business models from this tax? Firstly, VAT has been paid on the product once, and secondly, the use VAT represents a presumably low revenue for the treasury.
