§ 10.0 p.m.
§ The Economic Secretary to the Treasury (Mr. Anthony Barber)I beg to move,
That the Purchase Tax (No. 3) Order, 1962 (S.I., 1962, No. 886) dated 30th April, 1962. a copy of which was laid before this House on 3rd May. be approved.This Order is consequential upon the Budget decision to extend the Purchase Tax to include ice cream.
§ Mr. Sydney Silverman (Nelson and Colne)On a point of order. I am sorry if I misunderstood what has happened. I thought that we were debating a Motion for the Adjournment and that the Question would be put to the House at the end of the debate.
§ Mr. SpeakerNo. Under our Standing Order the Motion lapses at ten o'clock and that is why I intervened when we had reached ten o'clock.
§ Mr. BarberI was explaining that this Order was consequential on the Budget decision to extend Purchase Tax to include ice cream. The Order was laid before the House on the day when we debated the Finance Bill on Second Reading, and my right hon. Friend the Chief Secretary in introducing the Bill explained briefly the necessity for the Order.
What the Order does is to include ice cream among the goods which are "prescribed goods" for the purpose of Section 12 of the Finance Act, 1954. That section deals with the assessment of Purchase Tax on unfinished goods, and provides that tax on any goods which are prescribed goods is to be assessed on the value they would have if they were finished and complete, even though at the material time they have not yet been put into that condition.
The present Order is necessary to enable us to deal with a practical problem in connection with the sale of ice cream. There is available nowadays a substance known as "soft" ice cream, which is made ready for sale, immediately before consumption, in special machines which are installed in 810 ice cream vans or on the counters of retail shops.
This ice cream is prepared from what are known as complete ice cream mixes. These mixes are substances which contain all the physical ingredients of ice cream, with the possible exception of water, and which apart from the possible addition of water need only aeration and freezing to become palatable as ice cream. Many of the people who make up ice cream for sale from these mixes are traders on their own account, and, if nothing further were done, they would be legally liable to Purchase Tax registration as manufacturers of ice cream.
But registration would obviously be a great inconvenience for these traders and also, incidentally, for the Revenue. As the House knows, a registered Purchase Tax trader has legal obligations about keeping accounts and making returns at regular intervals of the amounts of tax due from him, and many of these small traders might find it difficult to comply with these requirements, and, of course, keeping in touch with people who do not trade from fixed premises would be a problem on the Customs and Excise side also.
This Order enables us to avoid these practical difficulties. Recognising the fact that the complete ice-cream mixes which these traders use are really ice cream in an unfinished form, the Order gives authority for assessing tax on the mixes by reference to the wholesale value which they would have if they were already converted into finished ice cream. In this way the amount of tax on the mix will he equated with the amount which the trader would have to pay on the finished ice cream if he were registered. The result will be that there will be no need for registration of these traders, or for fiscal control over them.
The principle underlying the Order has the agreement of the trade associations concerned with ice cream and ice-cream mixes. The Order will make no difference whatever to the estimated revenue from ice cream. It will make no difference to the retail price. What the Order will do will be to save a great deal of trouble for all concerned, and I commend it to the House.
§ 10.5 p.m.
§ Mr. Douglas Jay (Battersea, North)This is a ridiculous Order, introduced to amend a ridiculous tax, by a ridiculous Government. The Economic Secretary's very few remarks have not justified the extraordinary action of the Government in the least. If there is such a thing as soft ice cream—which I can well believe—why could not the Government have discovered it before the Budget and the Finance Bill? It is bad enough that these foodstuffs should have had a tax clapped on them for the first time by a party which has always claimed that its policy is to reduce and not to raise taxation; it is even worse to have a Chancellor, who claims that his object is to simplify taxation, not merely bringing new substances and foodstuffs into the field of tax but also introducing a new rate of 15 per cent. to apply to these foodstuffs, which, incidentally, raises instead of reduces the number of rates of Purchase Tax now in force, thereby complicating and not simplifying the tax.
No, a further complication is introduced. We had the Budget Resolution first, on 9th April. That defined this tax as applying to
ice cream, ice lollies, water ices and similar frozen products, and prepared mixes and powders for making such products.We then had the Finance Bill, printed on 16th April, which included the same formula for describing ice cream, in the Eighth Schedule. But on 30th April the Government made this Order, amending the definition. It is extraordinary that they should have discovered, at this stage, that it was necessary to have additional legislation which would provide that incomplete and unfinished ice cream is to be treated for this purpose as if it were complete and finished ice cream.The Economic Secretary did not explain whether this correction was found to be necessary because the Government have made yet another mistake and have fallen into yet another muddle. Why does this have to be done by way of a Purchase Tax Order, and not by an amendment to the Finance Bill? This is an extraordinary way of proceeding. First, the Government introduced a Finance Bill, but before it has become law—indeed, even before it has reached the end of its Committee stage—we find 812 ourselves in the process of amending it by a Statutory Instrument.
This Order shows that all the Treasury Ministers—and we have only one here tonight—are in an advanced state of confusion, even in respect of the procedure by which they are trying to impose this unnecessary tax. I hope that the House will divide against the Order, as a protest against this confusion as well as against the tax.
§ 10.8 p.m.
§ Mr. BarberI shall try to deal very briefly with the points raised by the right hon. Member for Battersea, North (Mr. Jay). First, he asked why we did not discover this point before the Budget. The reason is that before my right hon. and learned Friend announced his proposals it was impossible to have discussions with the trade. Anybody looking at the way in which the proposals for this extension of tax were dealt with by Her Majesty's Customs and Excise will agree that great credit is due to them for the enormous amount of preparatory work they were able to do without any consultations whatever.
The right hon. Member went on to talk about increases or decreases of tax. The Order has no effect whatever on the yield of tax. The right hon. Member then asked why we were not going to amend the Bill.
§ Mr. JayThe hon. Member is surely not denying that the Government are imposing a new tax of 15 per cent. on this and other foodstuffs as a result of the Finance Bill and this Order.
§ Mr. BarberBy the Finance Bill we are imposing a tax of 15 per cent. on ice cream. If we did not have the Order the same yield of tax would be available to the Exchequer by means of extending registration for Purchase Tax purposes to thousands of small retailers throughout the country who, technically, are manufacturers of ice cream. This is something that we want to avoid.
The right hon. Gentleman then asked why we did not propose to amend the Finance Bill instead of adopting this procedure. As he will see, the Order was made on 30th April, to come into operation on 8th May, that date being the date when the Purchase Tax on ice cream became effective. If the right hon. 813 Gentleman will consider the timing of the Finance Bill, I think that he will agree that it would have been quite impossible to have moved an Amendment in time for this to coincide with the coming into operation of the tax.
The right hon. Gentleman has talked about opposing this Order. If the Opposition are seriously considering opposing it, let me remind the House briefly of the effect of the Order. What is the effect on the consumer of ice cream? The answer is nil. It makes no difference to the retail price. What is the effect on the Exchequer? The answer is nil. It makes no difference to the yield. What is the effect on several thousands of small traders? The answer is that it will save them a great deal of trouble and that, in fact, is the effect of this Order. That being so, it seems to me to be utterly incredible that any hon. Member, understanding what the Order is about, should consider opposing it.
§ speeches, I suppose that it is in order for me to do so—
§ Mr. Deputy-Speaker (Sir William Anstruther-Gray)It would not be in order unless with the leave of the House.
§ Mr. JayThat, of course, was what I meant, Mr. Deputy-Speaker.
What the Economic Secretary has said confirms my argument. What it amounts to is that, first, the Government made a mistake in introducing the original Budget Resolution on the Finance Bill. Then they discovered that they could not overcome the mistake because of the timetable, except by the unprecedented procedure of amending the Finance Bill during the Committee stage, not by an Amendment to the Bill but by a Statutory Order. I think that in protest against this procedure and this muddle the House should certainly divide against the Order.
§ Question put:—
§ The House Divided: Ayes 131, Noes 69.
815| Division No. 202.] | AYES | [10.12 p.m. |
| Agnew, Sir Peter | Fisher, Nigel | Macpherson, Niall (Dumfries) |
| Aitken, W. T. | Fraser, Ian (Plymouth, Sutton) | Mathew, Robert (Honiton) |
| Atkins, Humphrey | Godber, J. B. | Mawby, Ray |
| Balniel, Lord | Goodhart, Philip | Maydon, Lt.-Cmdr. S. L. C. |
| Barber, Anthony | Goodhew, Victor | Miscampbell, Norman |
| Barlow, Sir John | Grant-Ferris, Wg. Cdr. R. | Nabarro, Gerald |
| Barter, John | Green, Alan | Neave, Airey |
| Batsford, Brian | Grimond, Rt. Hon. J. | Noble, Michael |
| Bennett, F. M. (Torquay) | Gurden, Harold | Osborn, John (Hallam) |
| Berkeley, Humphry | Hall, John (Wycombe) | Page, John (Harrow, West) |
| Biffen, John | Hamilton, Michael (Wellingborough) | Page, Graham (Crosby) |
| Black, Sir Cyril | Harrison, Brian (Maldon) | Pannell, Norman (Kirkdale) |
| Bossom, Clive | Harrison, Col. Sir Harwood (Eye) | Partridge, E. |
| Box, Donald | Harvey, Sir Arthur Vere (Macclesf'd) | Pearson, Frank (Clitheroe) |
| Boyle, Sir Edward | Hastings, Stephen | Peel, John |
| Braine, Bernard | Heald, Rt. Hon. Sir Lionel | Pickthorn, Sir Kenneth |
| Brown, Alan (Tottenham) | Heath, Rt. Hon. Edward | Pitt, Miss Edith |
| Bryan, Paul | Henderson, John (Cathcart) | Pott, Percivall |
| Buck, Antony | Hinchingbrooke, Viscount | Prior, J. M. L. |
| Butcher, Sir Herbert | Hirst, Geoffrey | Pym, Francls |
| Campbell, Gordon (Moray & Nairn) | Holland, Philip | Quennell, Miss, J. M. |
| Channon, H. P. G. | Hopkins, Alan | Rawlinson, Peter |
| Chataway, Christopher | Hughes-Young, Michael | Redmayne, Rt. Hon. Martin |
| Chichester-Clarke, R. | James, David | Ridley, Hon. Nicholas |
| Clark, William (Nottingham, S.) | Jenkins, Robert (Dulwich) | Roberts, Sir Peter (Heeley) |
| Cleaver, Leonard | Johnson, Eric (Blackley) | |
| Collard, Richard | Johnson Smith, Geoffrey | Roots, William |
| Cordeaux, Lt.-Col. J. K. | Kerans, Cdr. J. S. | Ropner, Col. Sir Leonard |
| Corfield, F. V. | Kershaw, Anthony | Skeet, T. H. H. |
| Costain, A. P. | Kimball, Marcus | Smith, Dudley (Br'ntf'd & Chiswick) |
| Courtney, Cdr. Anthony | Kirk, Peter | Smithers, Peter |
| Craddock, Sir Beresford | Lambton, Viscount | Summers, Sir Spencer |
| Crosthwaite-Eyre, Col. Sir Oliver | Leavey, J. A. | Taylor, Frank (M'ch-st'r, Moss Side) |
| Cunningham, Knox | Leburn, Gilmour | Teeling, Sir William |
| Curran, Charles | Lewis, Kenneth (Rutland) | Temple, John M. |
| Dance, James | Linstead, Sir Hugh | Thomas, Peter (Conway) |
| Doughty, Charles | Litchfield, Capt. John | Thompson, Richard (Croydon, S.) |
| du Cann, Edward | Longden, Gilbert | Thornton-Kemsley, Sir Colin |
| Elliot, Capt. Walter (Carshalton) | McLaren, Martin | Thorpe, Jeremy |
| Elliott, R.W.(Nwcastle-upon-Tyne,N.) | McLean, Neil (Inverness) | Touche, Rt. Hon. Sir Gordon |
| Emery, Peter | Macleod, Rt. Hn. Iain (Enfield, W.) | Vickers, Miss Joan |
| Errington, Sir Eric | Macmillan,Rt.Hn.Harold(Bromley) | Walder, David |
| Ward, Dame Irene | Wolridge-Gordon, Patrick | TELLERS FOR THE AYES: |
| Williams, Dudley (Exeter) | Woollam, John | Mr. J. E. B. Hill and Mr. Rees. |
| Wilson, Geoffrey (Truro) | Yates, William (The Wrekin) | |
| NOES | ||
| Bennett, J. (Glasgow, Bridgeton) | Houghton, Douglas | Rankin, John |
| Bottomley, Rt. Hon. A. G. | Hughes, Emrys (S. Ayrshire) | Redhead, E. C. |
| Bowden, Rt. Hn. H.W. (Leics.S.W.) | Hunter, A. E. | Reynolds, G. W. |
| Boyden, James | Hynd, John (Attercliffe) | Roberts, Goronwy (Caernarvon) |
| Brown, Rt. Hon. George (Belper) | Janner, Sir Barnett | Robertson, John (Paisley) |
| Butler, Herbert (Hackney, C.) | Jay, Rt. Hon. Douglas | Rodgers, W. T. (Stockton) |
| Cliffe, Michael | Jeger, George | Rogers, G. H. R. (Kensington, N.) |
| Craddock, George (Bradford, S.) | Jones, Elwyn (West Ham, S.) | Ross, William |
| Darling, George | Kenyon, Clifford | Short, Edward |
| Davies, Harold (Leek) | MacColl, James | Silverman, Sydney (Nelson) |
| Deer, George | McInnes, James | Skeffington, Arthur |
| Diamond, John | McKay, John (Wallsend) | Sorensen, R. W. |
| Driberg, Tom | MacMillan, Malcolm (Western Isles) | Soskice, Rt. Hon. Sir Frank |
| Edelman, Maurice | Mendelson, J. J. | Taverne, D. |
| Edwards, Walter (Stepney) | Mitchison, G. R. | |
| Fletcher, Eric | Noel-Baker, Francis (Swindon) | Thomas, George (Cardiff, W.) |
| Foot, Michael (Ebbw Vale) | Oram, A. E. | Thomson, G. M. (Dundee, E.) |
| Ginsburg, David | Owen, Will | Wainwright, Edwin |
| Gooch, E. G. | Pargiter, G. A. | Warbey, William |
| Greenwood, Anthony | Parker, John | Weitzman, David |
| Hayman, F. H. | Pavitt, Laurence | Wilkins, W. A. |
| Healey, Denis | Probert, Arthur | Wilson, Rt. Hon. Harold (Huyton) |
| Hilton, A. V. | Proctor, W. T. | |
| Holman, Percy | Pursey, Cmdr. Harry | TELLERS FOR THE NOES: |
| Mr. Lawson and Mr. McCann. |
| Resolved, |
| That the Purchase Tax (No.3) Order, 1962 (S.I., 1962, No. 886), dated 30th April, 1962, a copy of which was laid before this House on 3rd May, be approved. |