PURCHASE TAX (DRUGS AND MEDICINES) (Hansard, 31 January 1949)

§ The Economic Secretary to the Treasury (Mr. Douglas Jay)

I shall be very glad to give an explanation if the right hon. Gentleman wants one. This order has two simple objectives. The first is to extend the exemption from Purchase Tax which certain drugs and medicines already enjoy, under the Finance Act of last summer, to include drugs or medicines described in any formula of what is known as a drug tariff by the Minister of Health for the National Health Service. The House will remember that last summer we exempted a whole class of drugs and medicine which were of established medical value and were listed in certain professional documents which were set out in the Act. They were defined in Part II of the Eighth Schedule, and we are now simply adding to that list certain additional drugs and medicines as described in any formula of any drug tariff determined by the Minister of Health for the National Health Service. This addition of exempt drugs has the support of the medical profession, and, incidentally, of the drug trade. Its practical effect is to add seven standard medicines to the 1458 exempted list, and I think that probably everybody in the House will support it.

The second purpose of the order is simply to clear up a doubt which has arisen about the interpretation of Part II of the Eighth Schedule, which was approved by the House last summer. It was because of a re-interpretation which may be held to involve a new charge that an affirmative resolution is necessary. The point really is that Part II of the Eighth Schedule seeks, in effect, to exempt non-proprietary medicines and drugs from Purchase Tax, and, since proprietary medicines, in fact, always bear a trade mark, the intention of Part II was to effect that purpose by banning any drug or medicine with a trade mark from the exempted list; and that was done by paragraph 5 of Part II of the Schedule. At the same time, there was a provision in paragraph 3 (e) of the Schedule that containers or labels on the drugs or medicines might bear the name of the maker or seller and yet the drug or medicine would remain exempt from Purchase Tax.

The question then arose whether, if there was a firm which used its own name in the form of a trade mark, the goods would be exempt from Purchase Tax or not. There was an apparent inconsistency between these paragraphs The Customs and Excise gave an interpretation, which I am sure was in accordance with the intentions of the House last summer, to the effect that, if the name of the seller was used in the form of a trade mark, the medicine could not be exempt from Purchase Tax, because the whole purpose was that no goods marked with a trade mark should be so exempt. As a matter of fact, that decision was accepted by all the firms concerned except one, and the firm which was not willing to accept it maintains that it was within the law in continuing to use its name as a trade mark, and, at the same time, claiming the exemption from Purchase Tax. It is perfectly open to the firm to use its trade mark if it does not claim exemption from Purchase Tax.

The intention of this order is to put the matter beyond doubt and declare that no firm using its name as a trade mark can claim exemption. If we do not do that, we should clearly be unfair, both to all other makers of proprietary goods who do not happen to use their names, and, indeed, to the other firms who do 1459 use their names but have agreed to accept the interpretation. For these reasons, I commend the order to the House.

§ Mr. Osbert Peake (Leeds, North)

I am much obliged for the extremely clear explanation which the hon. Gentleman has given of this order. During the Debates on the Finance Bill, we took the view, and we still adhere to it, that all medicines, including those of a proprietary and branded character, should be exempt from Purchase Tax. This order, it appears, is designed to secure that the intention of the provision in the Finance Act of last year is effectively carried out. It would appear that, where a trade mark appears on a bottle of medicine, that medicine, under the law —although we do not like the law—is subject to Purchase Tax, and that there is, at any rate, one firm, at least, in putting its trade mark upon a bottle of medicine puts its name in such a way as to make it appear that the trade mark is on the bottle. That, I understand, is the position which has arisen, and, in these circumstances, it seems to us to be a reasonable procedure to ask the House to pass this order.