§ 5. Mr. Nabarroasked the Chancellor of the Exchequer whether he is aware that anticipation of substantial Purchase Tax reductions, also of further measures of simplification of the tax, to be included in his April, 1959, Budget, will cause prospective buyers of many items, notably motor cars and television and radio sets, taxed at 60 per cent., to postpone purchases until after Tuesday, 15th April, 1959; and, in view of trade dislocation, withholding of orders by the distributive trade to factories, and the consequential danger of increased short-time working and unemployment thereby resulting, whether he will effect all intended Purchase Tax reductions, and no increases, on 1st January, 1959, instead of in his April, 1959, Budget.
Mr. AmoryI must refer my hon. Friend once again to the reply I gave to the hon. Member for Barnsley (Mr. Mason) on 18th November.
§ Mr. NabarroBut is not mounting winter unemployment, often wrongly described as seasonal unemployment, in the first quarter of every year, now most largely due to uncertainties in connection with Purchase Tax changes? Is not 182 it a fact that my right hon. Friend the Home Secretary when he was Chancellor of the Exchequer, in order to avoid these disruptions in industry, made his announcement of Purchase Tax changes early in the new year? Will my right hon. Friend follow that admirable precedent?
Mr. AmoryI doubt whether uncertainty over Purchase Tax is, as my hon. Friend implies, the main factor or even one of the chief factors in the seasonal unemployment.
§ 6. Mr. Nabarroasked the Chancellor of the Exchequer whether he is aware that the yield of Purchase Tax has increased from £290 million in 1950–51, representing some 7 per cent. of total revenue of approximately £4,000 million, to over £490 million, representing nearly 10 per cent. of total revenue in 1958–59 of approximately £5,000 million; and whether he will now state on what grounds he considers it justifiable to obtain such substantially larger proportion of the revenue by means of Purchase Tax, having regard to the inflationary effects of this increase.
Mr. AmoryAs regards the first part of the Question, my hon. Friend has exaggerated the increase in the Purchase Tax yield as a proportion of total revenue. As regards the second part, I am aware of my hon. Friend's views, but he will not be surprised if I do not agree with him.
§ Mr. NabarroThere is always room for disagreement in these matters. Would not my right hon. Friend concede the accuracy of the fact that last year he collected £494 million in Purchase Tax, that this year he Budgeted for £491 million in Purchase Tax, and that, pro rata, for the first seven months of this year, converted to the full current year, he will actually gather in £520 million in Purchase Tax, or £2 million per working day out of the wage earners' pay packets? Surely he ought to do something about that.
Mr. AmoryI limited myself to pointing out the inaccuracy in the figures which my hon. Friend included in his Question, and I must urge him, if he wishes to score as many goals as I know he would like to do in the next few months, to concentrate on accuracy.
§ Mr. JayIs not the hon. Member for Kidderminster (Mr. Nabarro) this time quite accurate in saying that the present Government are raising in Purchase Tax £200 million more than the Labour Government and a total tax revenue of £1,000 million more?
§ Mr. NabarroMay I ask a further supplementary question, Sir? [HON. MEMBERS: "No."] It is a very short one. Would my right hon. Friend refer to the Report of O.E.E.C., published 48 hours ago, urgently stressing the need for further Purchase Tax reduction?
§ 7. Mr. Nabarroasked the Chancellor of the Exchequer for what reason valve replacements for radio sets and cathode ray tubes for television sets are subject to Purchase Tax at 60 per cent., whereas spare parts, for example sparking plugs, for other articles, subject to purchase tax at 60 per cent., for example motor cars, are not so liable; and whether he will correct this anomaly at an early date.
Mr. AmoryFor revenue reasons. Quite different considerations arise in the case of spare parts for vehicles.
§ Mr. NabarroI am a practical man, Sir. Is not it the fact that a sparking plug makes a motor car go, that a cathode ray tube makes a television set go and that a valve makes a radio set go? As all these are essential spare parts, why should my right hon. Friend be so predatory in taking 60 per cent. Purchase Tax on radio valves or cathode ray tubes and nothing on sparking plugs for motor cars? Surely he should be practical, reasonable and equitable in all these matters?
Mr. AmoryI think my hon. Friend rather over-simplifies things, as he sometimes does. A sparking plug is not the thing that makes a motor car go, but one of the things that makes a motor car go. As a practical man, I think he will know the difference between a cathode ray tube and a sparking plug, and between a radio set and a motor vehicle.
Mr. H. WilsonCan the right hon. Gentleman explain to us why this practical man last year did not vote with us in the Division Lobby for the reduction of the 60 per cent. Purchase Tax on cathode ray tubes?
Mr. AmoryMy hon. Friend is far too practical a man to vote in the Lobby with the right hon. Gentleman.
§ Mr. SpeakerMr. Philips Price.
§ Mr. WoodburnOn the human side of this matter, is the Chancellor aware that both the Purchase Tax—
§ Sir A. V. HarveyOn a point of order. Is not it a fact that before the right hon. Gentleman asked his Question, you called the hon. Member for Gloucestershire, West (Mr. Philips Price)?
§ Mr. SpeakerYes, but, before the hon. Member rose to ask Question No. 8, the right hon. Gentleman got up to ask another supplementary question.
§ Mr. WoodburnI am sorry, Mr. Speaker, but my question will be a very short one. Is the right hon. Gentleman aware that both the Purchase Tax and the high price of cathode ray tubes prevent a very large number of people of humble means from enjoying this very important contribution to modern life?
Mr. AmoryI will take into consideration, when considering my taxation proposals, the point the right hon. Gentleman has made.
§ 10. Mr. Frank Allaunasked the Chancellor of the Exchequer if, in order to reduce the cost of living, the unemployment in the wool textile and clothing industries, and the recently-created tax anomalies, he will consider removing the Purchase Tax on wool cloth.
Mr. AmoryI removed the tax on wool cloth in my last Budget. Tax is charged at 5 per cent. on clothing made of wool.
§ Mr. AllaunIs not it grossly anomalous that if a customer buys a suit length and takes it to his tailor, no tax is payable, yet if he buys a suit length from the same tailor—his own tailor—tax is payable, both on the material and on the making-up charge? Is not that a daft idea? Will the Chancellor before 185 April consider removing this tax, particularly in view of the heavy unemployment in these industries?
§ Mr. NabarroThat is just the point I was making.
Mr. AmoryThe change was made last year at the request of many organisations representative of the trade in order to reduce anomalies. Again, I will certainly bear in mind the points which the hon. Gentleman has made.
Mr. H. WilsonWould the Chancellor agree that the anomalies created by only half taking off the tax were not introduced at the request of the trade, and that we produced many items of evidence to suggest that it would create more anomalies? Secondly, is he aware that one of his predecessors, the Lord Privy Seal, refused to take the tax off cotton goods until after the date of the 1955 General Election was announced, and said that it would be dishonest to do so? May I ask the right hon. Gentleman, if he is going to do anything about this, to do it now, in order to remove uncertainty and unemployment in the trade, and not wait until a pre-election Budget?
§ Mr. NabarroMy Question was non-political, not like the last one.
§ 11. Mr. Gowerasked the Chancellor of the Exchequer if he is satisfied that the higher rates of Purchase Tax are not limiting the ability of many industries to increase their exports; and if he will review these rates.
Mr. AmoryI shall be reviewing the whole field of taxation at the appropriate time; my hon. Friend must not expect me to comment on particular aspects now.
§ Mr. GowerHas there not been all along a singular reluctance by the Treasury to admit that a virile, expanding export industry cannot export without a large domestic industry as well?
Mr. AmoryMay I add that there is also a continuing responsibility on the Chancellor of the Exchequer to ensure that he raises the requisite amount of revenue?