HC Deb 17 January 1974 vol 867 cc898-900
7. Mr. Sydney Chapman

asked the Chancellor of the Exchequer what changes he now proposes in the incidence of value added tax.

The Financial Secretary to the Treasury (Mr. Terence Higgins)

The incidence of value added tax is changed to a minor degree by four statutory instruments which were laid before the House on 20th December 1973. As regards any major changes, I cannot anticipate my right hon. Friend's Budget Statement.

Mr. Chapman

I welcome generally the replacement of the arbitrary purchase tax and selective employment tax by the much more reasonable and lower-rated value added tax, but will my hon. Friend nevertheless look at some of the unfortunate minor consequences of this wide-ranging tax, particularly bearing in mind that in certain of its categories the administrative cost of collecting very little income is far too great?

Mr. Higgins

I would not necessarily accept the last point in my hon. Friend's question, but if he has a particular case or example in mind I will gladly look at it.

Mr. Loughlin

Without wishing to anticipate his right hon. Friend's Budget Statement, will the Minister give a categoric assurance that there will be no application of value added tax to food items?

Mr. Higgins

My right hon. Friend has no plans to alter the existing arrangements regarding zero-rated food. On the second point, the hon. Gentleman will recall that, as a result of the reform of indirect taxation which the present Government have carried out—the change from purchase tax and SET to value added tax—the tax falling on food is estimated for 1973–74 to be £255 million less than it would have been if it had continued as it was under the previous Government.

Mrs. Knight

Bearing in mind the difficulties in which many small firms often find themselves with regard to the three-day working week, particularly regarding cash flow, will my hon. Friend look at the suggestion made by various chambers of commerce and trade that payment of VAT due at the end of January could possibly be deferred?

Mr. Higgins

There is a later Question on the Order Paper on that subject. Indeed, a somewhat similar Question was answered yesterday. I refer my hon. Friend to those answers.

Mr. Joel Barnett

Regarding the last part of the Financial Secetary's previous answer, may I ask whether he is prepared to say what is the price of food, including tax, today in comparison to what it was in June 1970?

Mr. Higgins

That does not arise on this Question, but if the hon. Gentleman would like to table a Question on the matter we shall seek to provide an answer.

14. Mr. Hardy

asked the Chancellor of the Exchequer, if he will take steps to relieve all items of school uniform from VAT.

Mr. Higgins

No, Sir. The relief applies only to articles of clothing and footwear for young children.

Mr. Hardy

Is it not a silly little anomaly for school crests and badges to be liable for value added tax when they are sold separately? Does not the Minister realise that this reduces the benefit which is available if uniforms are sold so that parents can shop around and not have to rely on expensive monopoly supply arrangements?

Mr. Higgins

I wrote to the hon. Member about this in July. School blazers with a badge attached are regarded as a single article for tax purposes and if designed for a young child would be free of tax. A blazer for an older child would be taxable at the standard rate for the broad reason of the dividing line between the two.