Petition Calls For End To VAT On IT Repairs

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Manufacturers are killing the repair business to drive new sales, according to a petition calling for a tax incentive to kickstart a new green repair industry

A petition has been launched that will urge the government to abolish value-added tax (VAT) on IT repairs, as a way to encourage users to get most value out of their IT, and reduce the country’s carbon footprint.

Launched by repair company Comtek, the petition will call for the government to abolish VAT on the repair of all ICT products.  Making repairs cheaper would reduce the amount of e-waste companies produce, because they would be able to repair kit rather than junking it.

Zero VAT – an incentive for social change

Askar Sheibani

A zero-VAT incentive on repairs would encourage businesses to reduce the country’s carbon footprint, but any increase in repairs would face big opposition from manufacturers, said Askar Sheibani, CEO of Comtek: “There are loads of products whose life could be extended several times,” he told eWEEK Europe, “but it is a clash between the customer and the manufacturer, who wants to sell and manufacture as much as possible.”

Making new equipment uses an enormous amount of energy, said Sheibani, with one chip taking more energy to make than all the energy used by a laptop for three years, but vendors are ensuring that serviceable equipment goes into landfill because they want to sell more equipment. “This information has not been in the public domain,” he said. “It has been prevented from being publicised.”

The government’s green technology measures so far have focused on supporting new “eco-friendly” technologies, such as electric cars and new hardware which uses less electricity, he said, and have missed the opportunity for maintenance and repair, “either because of ministers’ lack of knowledge of ICT hardware, or because of the vendors’ lobbying.”

Jonathon Porritt and Catalina McGregor

The proposal has backing from public sector leaders: “Removing the VAT on repairs to used ICT equipment would be a tremendous benefit to the refurbishment community and could potentially tip the scales in the right direction,” said Catalina McGregor, UN ITU Green iCT Liaison Officer to the OECD and EC. Environmentalist Jonathon Porritt has also pointed out the importance of measuring total lifecycle costs, not just energy used by the consumer: “Buyers should focus on total cost of pollution (TCP) and not on total cost of ownership (TCO), which can often be a very naive energy calculation in view of the total lifecycle CO2 footprint from mining, transport, manufacture, transport again, packaging, fuels etc,” he said at a recent Green IT event.

“Refurbishment affects a significant range of UK green collar jobs,” added Ms McGregor “We often forget that an entire community of SMEs some of whom are empowering the disabled workforce focus wholly on re-use and refurbishment skills development and transformation. The United Nations Agency ITU are currently working on a complex iCT CO2 measurement model and this will be the foundation profile for our sector moving forward. This should be available in 2011.”

Repairs could prevent dirty dumping

Comtek makes a viable business out of repair, said Sheibani, because it concentrates on expensive enterprise and telco equipment from companies like Cisco, where the benefits of continuing use are great, but the size of the repair market could be much bigger. Users are scared to go against Cisco’s advice, he said: “Cisco tells customers this is end of life and their equipment is no longer supported. The customers panic because they don’t realise that there are organisations which can repair the products and provide technical support.”

The problems are more extreme for cheaper electronic goods, which can be made very cheaply in the Far East – sometimes using illegal child labour –  but importing new goods hurts the country’s trade balance, while repairing them here would produce a new industry and increase skills in the UK, he said: “In the long run, the Treasury is going to make money out of it, from regular taxation. Repairing products would reduce imports – and create sustainable jobs that require training. The social implication is enormous!”

The measure would also benefit the low end, he said where laptops and phones are often discarded because of the difficulty of finding someone to make simple repairs to them. Repairing equipment would remove it from the waste stream, where it can be illegally exported to developing countries and broken down using toxic chemicals.

The petition is intended to appear during the budget period, and will be continued for six months over the election and beyond. It will shortly be live on the Ten Downing Street site.

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