§ 54. Mr. McKay
asked the Chancellor of the Exchequer if he is aware that unless the cost of living is definitely prevented from rising any further there will be serious industrial unrest in the country; and if he will therefore consider reducing and where possible abolishing the Purchase Tax on articles essential to home life and personal needs, thus relieving the tension that is gradually increasing.
§ Mr. McKay
Will the Minister realise that this is a serious question? Does he know that there is a large percentage of our population whom he cannot relieve by manipulating the Income Tax because they are not paying any? Does he realise that many of these people are still getting very low wages; that the cost of living is continuing to rise beyond wages; and that, therefore, there is a great necessity for right hon. Gentlemen really to put their minds to this problem?
§ Mr. David Renton
Is the hon. Gentleman aware that his right hon. and learned Friend the Chancellor of the Exchequer has paid tribute to the restraint shown by both sides of industry and that the cost of living has risen mainly as a result of the Government's own failure to keep down the cost of the nationalised services? Will he bear that fact in mind?
§ Mrs. Leah Manning
Did my hon. Friend listen to the wandering microphone on Saturday night and, if so, did he hear six people in a row, asked whether they were interested in the de-rationing of clothes, reply, "No," because they could not afford to buy the clothes? As that is very good evidence, will he bring this matter forcibly to the attention of his right hon. and learned Friend before the Budget, and not afterwards?
§ 56. Mr. Marlowe
asked the Chancellor of the Exchequer whether he will give advance notice of not less than three months when it is intended to remove or reduce Purchase Tax on any particular article, in order to mitigate the loss which falls on retail traders.
§ Mr. Marlowe
Does not the hon. Gentleman realise that is precisely what I am asking him to do in this instance, because if trade is left in ignorance it causes unemployment, and causes the loss to fall on the retailers instead of on the consumers as was intended?
§ Mr. Marlowe
Would not the hon. Gentleman agree that there were effects in the radio and the bicycle trades in that time?
§ 57. Mr. Marlowe
asked the Chancellor of the Exchequer how many schemes have been submitted to him for the purpose of preventing loss falling upon retail traders when Purchase Tax is reduced or removed; what' has been their general nature; and what are the reasons which have influenced him in deciding that they would be impossible to administer.
§ Mr. Marlowe
Is the hon. Gentleman aware that large numbers of trades are being brought to a standstill through this lack of certainty between Christmas and Budget time, which is now causing considerable unemployment, and that unless the matter is dealt with very urgently, it will lead to very serious consequences?
§ Mr. Stanley
Is it not time that the hon. Gentleman took this matter seriously? Is it not a fact that it has been raised on each of the last three Budgets? Is it not time, instead of always trying to foist responsibility on the trade 950 to produce a scheme, for the people upon whom responsibility rests, that is, the Treasury, now to produce a scheme themselves?
§ Mr. Jay
I can assure the right hon. Gentleman we have taken this subject very seriously for a very long time. Both during the Finance Bill discussions last Summer and since, every possible effort has been made by the Departments concerned and, I believe, by industry to find a practicable solution. So far none of us has succeeded.
§ Mr. John Lewis
Can my hon. Friend give the House any idea of the nature of these schemes which have been put up and why they are unsatisfactory? Will he bear in mind at the moment that some of the most reputable retail houses are now asking for goods to be supplied "on sale or return" terms?
§ Brigadier Prior-Palmer
Is the hon. Gentleman aware that one small retail firm alone lost £10,000 on records stock because of one sentence in last years' Budget speech? Is that not an intolerable loss that no small firm can possibly bear?
§ Sir William Darling
Can the hon. Gentleman name a single trade association which has not protested against the uncertainties arising out of Purchase Tax? Can he name one in the United Kingdom?
§ Mr. Marlowe
In view of the failure of the Treasury to devise a scheme to remedy this admitted injustice, will the hon. Gentleman make way for somebody who can remedy it?
§ Following is the answer:
§ A number of different suggestions have been made, but they are all variants of two main ideas. One was that each retailer concerned would take stock of his goods after a tax reduction, and put in a detailed claim showing the quantity of each line of goods on hand, and the difference in tax involved.
§ Examination of this proposal with the trade representatives showed that many of the smaller retailers would find the greatest difficulty in preparing such a 951 claim, and that, in any case, it would be quite impossible subsequently to check what stock the retailers might claim to have had at the time of the tax reduction. The retailers' representatives recognised, therefore, that this was impracticable, and put forward an alternative based on "Stockturn" periods.
§ Under this scheme the average time which retailers in each trade take to turn over their stock (called the stockturn period for that trade) was to be ascertained. The retailer's stock at the time of the tax reduction would then be deemed to equal the quantity of each class of goods concerned which he had purchased during the stockturn period appropriate to each. It was argued that the quantities so purchased could be checked officially from the suppliers' books, and that effective control could thus be exercised over the retailers' claims. This scheme, however, never took practical shape, for no means of ascertaining the true average of stockturn period for each of the many classes of goods concerned could be found. Apart from that, and a number of other practical difficulties in the way of working the scheme, it was obvious that it would operate most unfairly as between one retailer and another. While theoretically it might be fair on the average, the retailer whose stock was small in relation to his purchases would get too much relief, while the retailer whose stock was large in relation to his purchases would get too little.
§ Both schemes, moreover, assumed that on a tax reduction retailers have at once to mark down the price of all their goods concerned by the difference in tax. Experience shows that this assumption is justified only with a few classes of goods, mostly the more expensive fixed-price goods in good supply, and that over much the greater part of the Purchase Tax field a tax reduction does not by itself involve an immediate markdown in retail prices equal to the amount of the tax reduction.