The UK government asked the European Commission in January for permission to deviate from the Europe-wide VAT rules on the goods most commonly used in the fraud.

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"It is completely unfair that even though these colleges are funded in the same way as sixth forms attached to schools and are teaching the same age children, they are treated differently under the VAT rules, " he told Chief Secretary to the Treasury Danny Alexander.

BBC: Fair funding campaign for sixth form colleges

European entrepreneurs are hampered by higher hurdles of social engineering: VAT taxes, union work rules, employee job security, etc.

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The government is to change the tax rules that have allowed retailers to avoid paying VAT by sending goods from the Channel Islands.

BBC: Treasury to close loophole that allows VAT-free DVDs

Mr Balls drew MPs' attention to previous U-turns on changes to the rules governing tax relief on charitable giving, and imposing VAT on static caravan sales and hot takeaway food.

BBC: Osborne postpones 3p fuel duty rise due in August

It should lighten payroll taxes (VAT or green taxes would do less harm) and loosen labour-market rules to give employers more flexibility over hours and wages in a downturn.

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