HC Deb 14 April 1953 vol 514 cc52-4

So I turn first to Purchase Tax. With the return of more normal conditions the burden of Purchase Tax at very high rates now presses almost unbearably on trade and on the community as a whole. I have also to think in this connection of the buoyancy of the revenue in the longer term and of the stability of the tax. Looking at the tax from these points of view, I have come to the conclusion that, while there are a few points which require particular treatment, the fact of the matter is that the present rates are too high, and the margins between rates too wide. The difficulties are most apparent in the case of goods chargeable at the higher rates, where in some cases the tax has proved heavier than the industries concerned can bear, and a danger of redundancy of labour has shown itself. All this is doing damage to home trade, to skill, craftsmanship and tradition and, above all, is reacting adversely on our all important export trade.

Last year I was able to introduce some easement in the classes associated with Utility schemes and now covered by the D Scheme. This year I turn to the rest of the field, and I have decided on an all-round reduction of the rates—in fact, one quarter off each of the rates in this general field—which will also have the effect of reducing the margins between them. A reduction of the 100 per cent. rate to 75 per cent. will give some help to the jewellery and silverware trades, where traditional skills must be fostered if they are not to die. I would say in passing that the fact that cosmetics happen to be in this group and will come down was not designed as a method of wooing the electorate.

Bringing the 66⅔ per cent. rate to 50 per cent. will affect the group of articles, including motor cars, radio and television sets, refrigerators, vacuum cleaners and washing machines, on which the tax was increased in 1951. In present circumstances there is not the same pressure on the resources of the industries concerned and to keep the tax at the same high level as before is not necessary. The 33⅓ per cent. rate comes down to 25 per cent. Many items in daily household use—carpets, linoleum, hardware, cutlery, bicycles and so on, will be affected. I do not suppose that even this reduction will make Purchase Tax popular, but it will do much to ease trade and household purchases. Hon. Members will be aware that to go further would cause undue strain upon the position of distributors carrying taxed stocks, and would be inconsistent with our acceptance of the recommendations of the Committee over which Sir Maurice Hutton presided.

There are, however, a few classes of goods where exceptional treatment is necessary. Let me take the Committee round the shop window. I propose to exempt from tax batteries for wireless sets. These are required by people living in areas with no mains supply of electricity, especially in the rural areas. The common and trusty umbrella comes down from 66⅔ per cent. to 25 per cent. Pianos benefited from relief last autumn, but I believe that nothing short of complete exemption will enable this craft industry to survive and so continue to make its useful contribution to our export trade.

Certain fancy goods, as the White Paper shows, will no longer be liable to a specially high rate. Light three- wheeled motor cars come down to 25 per cent. and will be treated the same as motor-cycle combinations. I hope to come to the rescue of electric goods vehicles by exempting them from the 33⅓ per cent. tax on their chassis and so putting them on the same footing as the pedestrian-controlled type.

For safety's sake I propose to reduce from £1 5s. to 10s. the additional motor duty on light motor-cycles up to 250 c.c. with sidecars.

Now, taxicabs. The position of the London taxi service was strongly pressed by my hon. Friend the Member for St. Marylebone (Sir W. Wakefield) and others last year. It has recently been examined by a Committee under the chairmanship of Lord Runciman. Their valuable Report, which was published last week, has been carefully examined by the Government. The Committee considered very closely the proposal put forward for relief from petrol duty in favour of the taxi owners; but for the reasons shown in their Report they found themselves unable to support such a proposal. The Government agree with the Committee that there are conclusive objections to such a course, but we accept their recommendations that taxicabs of a type approved by the Commissioner of Police in London shall be exempt from Purchase Tax and that they shall also be freed from all hire-purchase restrictions.

All these Purchase Tax changes will operate from tomorrow, and as new supplies begin to reach the shops, they should lead to a useful reduction in prices. The cost will be £45 million this year and £60 million in a full year.

Before leaving the Purchase Tax, I want to refer to the wording of the general Resolution relating to amendment of the law with regard to the public revenue. This resolution permits of amendments to the law relating to Purchase Tax as a whole and also amendments reducing any of the rates of tax generally for all goods to which the rate applies. It does preclude amendments altering the rates of tax on particular items in the Purchase Tax schedule. I hope this arrangement will commend itself to the Committee as sensible and as according with the practice of the last few years in avoiding "Dutch auction" proceedings.