Motion made and Question proposed,
That the Purchase Tax (No. 1) Order, 1959 (S.I., 1959, No. 641), dated 7th April, 1959, a copy of which was laid before this House on 7th April, be approved.—[Mr. Simon.]
§ 10.16 p.m.
§ Mr. Douglas Houghton (Sowerby)
Does not the Financial Secretary intend to explain this jargon? A few moments ago I was handed this small chore, and was rather anxious to know what it was all about. The hon. and learned Gentleman has some papers there—he is obviously briefed. He is not a lazy man, so may I ask him just to enlighten the House? I rather think that we approve of this Order. I fancy that it is something that we asked the Government to do twelve months ago. They would not do so then, and we are naturally pleased that they are prepared to do so now, but would the Financial Secretary please enlighten us?
§ 10.17 p.m.
§ The Financial Secretary to the Treasury (Mr. J. E. S. Simon)
I naturally respond gladly to the invitation of the hon. Member for Sowerby (Mr. Houghton), even though his object may be to prevent me from becoming lazy. It is 349 perfectly true that this Order is consequential on the exemption in the Budget of television tubes from Purchase Tax. The hon. Member will know, I think, that the tube in a television set is a very valuable part of it, and is easily removable.
The tax on the tube, which brought in, he will remember,£1½ million a year, was imposed for two reasons. The first was the revenue produced, which was the reason why my right hon. Friend did not find it possible twelve months ago to respond to the plea for its abolition of the tax. Secondly, the tax acted as a deterrent to anybody who might choose to remove the tube from the set, sell the set at a lower value, subject to the appropriate Purchase Tax, but sell the tube tax-free separately, after which anybody could fairly easily fit the two together. In other words, it was a protection to the Revenue.
350 It was represented to my right hon. Friend by a deputation from the industry, which my hon. Friend the Economic Secretary received, that there was an alternative way of safeguarding the Revenue if my right hon. Friend found it possible to forgo the Revenue from the tax. What this Order does is to adopt an alternative method for protecting the Revenue, and preventing abuse by selling the set and the tube separately.
That is not a device that appeals to the radio industry generally and, as I say, it was the industry itself that suggested this alternative method, which simply lays down that any television set that lacks a cathode ray tube at the time that the tax becomes chargeable will nevertheless be valued for tax purposes as if the appropriate tube was there. In other words, the Order blocks a loophole, and I commend it to the Committee.
§ Question put and agreed to.