The government has rejected pleas for a reduction in the amount churches have 'to render unto Caesar' by way of VAT on maintaining buildings. Paymaster general Dawn Primarolo told MPs last week European Community VAT rules barred the government from conceding a 5% rate on church repairs. The demand was voiced by Second Church Estates commissioner Stuart Bell, Labour MP for Middlesbrough, who argued ministers should seek to extend a draft European Directive permitting a lower rate of VAT on labour-intensive home repairs to artistic heritage as well. Bell, the designated MP to reply to MPs' questions about the Church of England, complained: 'The millennium will end as it began with the Church rendering unto Caesar - that is, the state - that which belongs to Caesar, although at severely damaging VAT rates and under an unreformed VAT system.' Bell said government decisions to switch from direct to indirect taxation had added VAT to the cost of church repairs, while reducing covenant income - while tax has been extended to cover church halls, heating and insurance tax. He said the tax burden on the voluntary sector has risen £460m in 20 years. He added the General Synod had called for a harmonised 5% lower rate of VAT on all building work. Other European countries charge lower VAT rates on the costs of repairs to historic buildings.
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