HC Deb 28 November 1950 vol 481 cc941-3
47. Mr. Donner

asked the Chancellor of the Exchequer whether in view of the rising prices of goods and the consequential automatic increase in Purchase Tax levied upon these, he will limit the rate of such tax to the value of the goods concerned at the time when they became liable to tax.

Mr. Gaitskell

Under the law Purchase Tax is chargeable on the wholesale value at the time when the tax in respect of any particular consignment of goods becomes due. Apart from other considerations, it would not be practicable to assess value on the basis that the hon. Member apparently has in mind.

Mr. Donner

Is the right hon. Gentleman aware that when Purchase Tax was introduced, Parliament never envisaged the rise in prices which has taken place and that, as a result of the high incidence of this tax, the revenue, for example, on piece goods, has been halved this year?

Mr. Gaitskell

This is an ad valorem duty and, like other ad valorem duties, revenue increases when the taxes go up and decreases when they go down.

Air Commodore Harvey

Is the right hon. Gentleman aware that if the tax continues on the present level, it will not be long before it has a very adverse effect on our export trade?

50. Mr. Wills

asked the Chancellor of the Exchequer whether he is aware that the cost of post or carriage between wholesaler and retailer is added to the price of goods before the amount of Purchase Tax is calculated; and whether he will ensure that the price on which the percentage tax is calculated is the wholesale price only.

Mr. Gaitskell

Under the law postal or other delivery charges have to be included when computing the value of goods for Purchase Tax. This provision was included in the Finance (No. 2) Act, 1940, because it was represented that most goods chargeable with the tax were sold on delivered terms and assessment on any other basis would have caused practical difficulties for the great majority of traders. I am advised that these considerations still apply.

Mr. Wills

Does the Chancellor realise that this does mean there is an arbitrary addition to prices in different parts of the country which bears rather more hardly on people who live in remote districts and, incidentally, adds to the cost of living?

Mr. Gaitskell

I appreciate that that may be the case in remote districts, but, as the hon. Member will see, there are great practical difficulties in taking any other course.

51. Mr. Braine

asked the Chancellor of the Exchequer why certain items of protective equipment and clothing which employers are compelled to purchase for their employees are not subject to Purchase Tax while others, such as heavy foundry mitts, are subject to Purchase Tax.

Mr. Gaitskell

With the exception of miners', quarrymen's and moulders' protective boots and miners' and quarrymen's protective helmets, which were exempted by the Finance (No. 2) Act, 1940, with the special object of encouraging their use, no non-utility protective clothing and equipment is specifically exempted from tax. Exemptions of this kind lead to discrimination between one kind of worker and another and it has for this reason been decided not to extend them. A general exemption for all protective clothing is unfortunately quite impracticable.

Mr. Braine

Does the right hon. Gentleman's answer really mean that the Government are prepared to give to a nationalised industry concessions which they are not prepared to give to private employers?

Mr. Gaitskell

No. Sir. It means exactly what it says, namely, that it was considered desirable in 1940, by the then Government, to encourage the use of this particular protection.

Captain Crookshank

When the Chancellor says it is quite impracticable, does he mean because of difficulties about identification or because of the cost?

Mr. Gaitskell

Because of the difficulties about identification.

64. Mr. Hugh Fraser

asked the Chancellor of the Exchequer to what extent he estimates that the increase in the yield of Purchase Tax during the current financial year is the result of the rise in price of goods subject to that tax.

Mr. Gaitskell

The revenue from Purchase Tax amounted to approximately £292 million in 1949–50. Allowing for the changes introduced in the Finance Act, including in particular the application of Purchase Tax to commercial vehicles' chassis, the estimated yield for 1950–51 is £300 million. So far receipts are broadly in line with expectation.

The yield from Purchase Tax is, of course, affected by many other factors, including changes in the quantities of goods paying tax, as well as by changes in price, and it is therefore quite impossible to identify the effects of the latter alone.

Mr. Fraser

Is not it important that, when the House has almost no control over the imposition of Purchase Tax, because it is not debated during the Budget debates, some formula should be discovered for stopping the proportional increases which amount almost to proportional misrepresentation of the will of the House?

Mr. Gaitskell

There is no evidence, in the first place, that there has been a substantial increase of revenue from Purchase Tax on this account. As I explained earlier, this is precisely the same as with any ad valorem duty.