HC Deb 03 July 1951 vol 489 cc2144-5
55. Mrs. Castle

asked the Chancellor of the Exchequer why, in the case of certain price-controlled goods, Purchase Tax is charged on the maximum permitted price instead of on the actual price paid by the retailer.

61. Mr. Chetwynd

asked the Chancellor of the Exchequer why Purchase Tax is charged at the full rate when articles are sold at less than the maximum price.

Mr. Gaitskell

Purchase Tax is charged by reference, not to the retail price, but to the wholesale price as determined in the open market. In the majority of cases where the tax is collected from the wholesaler in respect of the sale to a retailer, it is based on the actual price paid by the retailer. There are, however, cases, especially when goods are sold in bulk by a manufacturer direct to a large retail store, where there is no normal wholesale transaction. In such cases, it is necessary, in order to preserve a common basis of assessment for different traders, to settle in accordance with the law what the open market wholesale value of the goods would be. This need not necessarily be the maximum wholesale price allowed under price control, though this is one of the factors which has to be taken into account.

Mrs. Castle

Is my right hon. Friend aware that where a member of the Carpet Trade Federation, which operates a price ring, agrees to sell to a retailer at less than the ring price, the Customs and Excise insist on Purchase Tax being paid on the maximum permitted price, rather than on the price actually charged to the retailer; and does he not think it improper that a Government Department should in this way reinforce the activities of a price ring which is operating against the interests of the consumer?

Mr. Gaitskell

I could not agree with my hon. Friend that the Customs are aiding and abetting a price ring in this matter at all. This procedure has always obtained since the Purchase Tax was first introduced, and it is the only way in which we can deal with the difficult problem of direct sales in bulk from the manufacturer, if we are to be fair to other traders, who pay their wholesalers in the normal way.

Mr. Chetwynd

Will my right hon. Friend have another look at this to make sure that the consumer can get the full benefit of the cheap price?

Mr. Gaitskell

It has been looked at a great many times since the Purchase Tax was introduced, and I repeat that if we are to be fair to all the traders concerned and put them on the same basis in regard to the tax, I know of no other way to do it; but I am quite prepared to have another look at it.

Mr. Grimond

Does the right hon. Gentleman not think that this tax runs quite contrary to Government policy of reducing prices? Is he aware that tax is sometimes charged on freight and postage, and will he look also at that aspect?

Mr. Gaitskell

Perhaps the hon. Gentleman will put a Question down.

Mrs. Castle

Is my right hon. Friend aware that his reply does not deal with my point, which concerns, not the difference of treatment between one retailer and another, but a difference of treatment of one retailer by one member of the Federation and another; and that he is, in fact, allowing a retailer to be held to ransom by the price ring by the operation of two different prices?

Mr. Gaitskell

Perhaps my hon. Friend will give me the particulars. Perhaps I have misunderstood her.