Purchase Tax

HC Deb 12 February 1963 vol 671 cc1088-95

2. Mr. Milne

asked the Chancellor of the Exchequer whether he will now remove the tax on sweets, soft drinks and kindred commodities.

45. Mr. Loughlin

asked the Chancellor of the Exchequer if he will now remove the tax on sweets and soft drinks.

51. Mr. Dalyell

asked the Chancellor of the Exchequer if he will consider abolishing Purchase Tax on soft drinks.

Mr. Maudling

I cannot anticipate my Budget decisions.

Mr. Milne

Is the right hon. Gentleman aware of the profound disappointment which that reply will give, in view of the fact that alterations have been made despite the forthcoming Budget? Will he recollect that when introducing this provision in his Budget speech his predecessor said that he expected some trouble on the home front, but he would brace himself to meet it, and that in bracing himself to meet it he was sacked by the Prime Minister in July? Will the right hon. Gentleman take steps to see that this tax is withdrawn?

Mr. Maudling

I should not have thought that anyone would have expected changes in Purchase Tax between now and the Budget. If he does, he is very ill-informed.

Mr. Loughlin

Does the right hon. Gentleman really think that the solvency of this country is dependent on, the taxation of children's pocket money? Will he recognise that there have been a number of closures of this type of factory, particularly those producing soft drinks, and will he give serious consideration to the matter at the time of his Budget?

Mr. Maudling

Naturally I will consider all the facts put before me, but I do not think that to pick out one particular item of revenue and say, "Is this or is this not essential to the economy?" makes much sense.

Mr. Dalyell

Will the right hon. Gentleman bear in mind that between July, August and September, 1961, and the same months of 1962 the volume of drink gallonage fell by 22.6 per cent.?

Mr. Maudling

Yes, but if the hon. Gentleman looks back further he will find similar falls in previous years.

Mr. J. Wells

Is my right hon. Friend aware that this tax has caused unemployment in the ice-cream industry and has had two bad effects on the farming community? First, the apple juice industry, which is in its infancy, has been very much penalised, to the detriment of agriculture. Secondly, is my right hon. Friend aware that the ice-cream provisions have had a very bad effect on the sales of dairy ice-cream?

Mr. Maudling

I am not sure. There are many factors operating this year on the sales of soft drink and ice-cream. I would not accept that the tax was the dominant one.

Mr. Milne

On a point of order. In view of the extremely unsatisfactory nature of that reply, I give notice that I shall raise the matter on the Adjournment.

16. Mr. Dempsey

asked the Chancellor of the Exchequer if he is aware that some sizes of school children's footwear are subject to Purchase Tax, while others are not; and if he will end this anomaly by abolishing Purchase Tax on such footwear.

The Financial Secretary to the Treasury (Mr. Anthony Barber)

The exemption applies to a range of footwear in sizes which on the average are suitable for children up to about the fourteenth birthday. Beyond this, children's and adult footwear cannot be satisfactorily distinguished, and I am afraid that it is therefore impossible to adopt the hon. Gentleman's suggestion.

Mr. Dempsey

Is the Minister aware that the continuation of this tax creates an indefensible situation in that, due to physical reasons, younger girls are paying the tax on shoes while older girls are not? Would it not be wise to end this anomaly by ending this tax and, at the same time, help the manufacturing industry?

Mr. Barber

The question of distinguishing children's clothing is not an easy one. It is, as the hon. Member has mentioned, not just a question of footwear. I can assure him that girls' dresses in particular have presented a difficult problem.

Mr. Mitchison

In view of the unemployment in the boot and shoe industries, would it not be wise to end the Purchase Tax altogether on boots and shoes?

Mr. Barber

That is another question.

17. Mr. Dempsey

asked the Chancellor of the Exchequer if he will abolish Purchase Tax on infant school girls' brief cases and thus end the anomaly whereby infant boys' school bags bear no Purchase Tax.

Mr. Barber

The exemption is for schoolchildren's shoulder satchels and these are used by girls as well as boys. There was formerly a tax relief for brief cases and document cases, but this was withdrawn by Lord Amory in his 1958 Budget, because of the anomalies to which it gave rise. The same considerations are relevant today, and there is no prospect of the relief being restored.

Mr. Dempsey

Is it not a scandal that many Scottish infant schoolgirls, who prefer taking briefcases to school, pay Purchase Tax on them, while infant boys who purchase school bags are totally relieved of Purchase Tax on them? Is not this an unjustifiable state of affairs about which the Government should do something?

Mr. Barber

Until Lord Amory decided to change the position in his 1958 Budget, a certain number of companies were thriving on just such borderline cases as the hon. Member has mentioned. I do not think that we would be justified in reversing the position.

Mr. Longden

Is my hon. Friend aware that it has not been unknown for girls to wear boys' bags?

19. Mr. John Hall

asked the Chancellor of the Exchequer to what extent the present estimate of the yield from 15 per cent. Purchase Tax on soft drinks differs from the estimate originally made.

20. Mr. E. Johnson

asked the Chancellor of the Exchequer what was the yield from Purchase Tax on soft drinks from the date on which it came into force until the end of 1962 or any later convenient date.

Mr. Maudling

The Budget estimate for the present financial year was £6¼ million. Receipts up to 31st December, 1962, amounted to about £5¼ million.

Mr. Hall

Will not my right hon. Friend agree that this shows that there has been a drastic fall in the sales of soft drinks during the period? Does not this mean that there will be a very considerable depression in Schweppeshire unless he does something about it? Is he prepared to consider reducing, if not altogether removing, the Purchase Tax on soft drinks?

Mr. Maudling

The sales of soft drinks fluctuate very much and my guess it that the weather has as much effect on sales as anything else. Taking the third quarter of 1962, the latest figures available, there was a big drop in 1962 compared with 1961 and an equally big drop in 1960 compared with 1959, so it probably is the weather.

Mr. Johnson

Is my right hon Friend aware that some countries, including Canada and the United States, have found it necessary to abolish the tax on soft drinks because of its very serious effect on the industry? Is it not possible that the revenue which he would receive from Income Tax, Surtax and Profits Tax through profits made on soft drinks would outweigh the advantages which he might gain from Purchase Tax as sales are falling so considerably?

Mr. Maudling

I should think that on the whole that is rather unlikely.

The Earl of Dalkeith

Does my right hon. Friend appreciate that, taking the weather into account, reductions in the sales of soft drinks as a result of Purchase Tax have been so great that the employment of sixty people in a factory in my constituency is threatened? What is more, is he aware that if these people were unemployed and he had to pay them unemployment benefit, what he would have to pay out in unemployment benefit would be greater than his gain from Purchase Tax on the sales from this factory?

Mr. Maudling

I am not sure that I accept my hon. Friend's estimate of the effect of Purchase Tax alone on the sale of soft drinks, but I should be glad to examine any evidence about particular cases in his constituency.

25. Mr. W. Clark

asked the Chancellor of the Exchequer what would be the cost to the Exchequer if Purchase Tax were reduced from 25 per cent. to 15 per cent. on motor cycles, pedal cycles, mopeds and other mechanically-assisted cycles.

Mr. Maudling

About £½ million in a full year.

Mr. Clark

I thank my right hon. Friend for that reply. Does not he agree, however, that the motor cycle industry has achieved magnificent results in exports, having exported £26 million worth of its products, which represents well over half its production? Does he not further agree that this industry is working at about half its load capacity, and is suffering tremendously from the reduction in home sales? Finally, will not he urgently consider a reduction in Purchase Tax from 25 per cent. to 15 per cent., thus giving the same incentive to this industry as was recently given to the motor car industry?

Mr. Maudling

I recognise the efficiency of this industry and the high quality of its products, but my hon. Friend will not expect me to comment on the question of future Purchase Tax rates.

26. Mr. Manuel

asked the Chancellor of the Exchequer what reply he made and what action he proposes to take, as a result of the letter sent to him by the Chairman of the Scottish Hosiery and Knitwear Manufacturers' Association suggesting the removal or reduction of Purchase Tax on knitted garments.

47. Mr. Willis

asked the Chancellor of the Exchequer what reply he has made to the representations of the Scottish Hosiery and Knitwear Manufacturers' Association concerning Purchase Tax on knitted outerwear.

Mr. Maudling

I have told the Association that I have noted its representations, and shall bear them in mind. I cannot say any more at this stage.

Mr. Manuel

Is the Chancellor of the Exchequer aware of the heavy unemployment and short-time working that exists in the Scottish knitwear industry? Is he further aware that a number of factories have closed down completely during the last year, and that the proposals made to the trade unions to freeze wages are being favourably considered by them? Will not he aid this industry, in order to boost home consumption, by abolishing Purchase Tax, thus giving the industry a chance to recover?

Mr. Maudling

I will consider what the hon. Member says, together with the representations from the industry, but he will not expect me to say any more now.

Mr. Willis

Will the Chancellor of the Exchequer bear in mind the fact that in the present state of Scottish economy we cannot afford to lose any more jobs?

Mr. Maudling

Yes, certainly.

Mr. Woodburn

Is the right hon. Gentleman aware that the woollen industry is suffering the further handicap of America's deliberately imposing quotas and restrictions on woollen imports? Is he further aware that the knitwear industry is our best dollar-earning industry in some parts of the country? Can he do something at the other end to see that these markets are not artificially closed to us, as well as helping with Purchase Tax?

Mr. Maudling

This is an important matter, which is really one for my right hon. Friend the President of the Board of Trade, but I will discuss it with him.

27. Mr. Spriggs

asked the Chancellor of the Exchequer what representations he has received from bodies, other than those in the furniture industry, about Purchase Tax on furniture.

Mr. Maudling

One, Sir, from the National Joint Council for the Glass Processing Industry about the Purchase Tax on mirrors.

Mr. Spriggs

Is the right hon. Gentleman aware that there is a great danger of increasing the number of unemployed workers in this industry, especially if he insists upon retaining the Purchase Tax on furniture?

Mr. Maudling

I am not sure that I accept that view of the prospects for the industry. I should have thought that one of the most important factors from that point of view has been the restoration of the "add-to" system of hire purchase that my right hon. Friend the President of the Board of Trade recently introduced.

28. Mr. Sydney Irving

asked the Chancellor of the Exchequer if, in view of the injurious effects it is having on the industry, he will remove the Purchase Tax on leather goods.

Mr. Maudling

I cannot anticipate my Budget decisions.

Mr. Irving

Will the Chancellor of the Exchequer remember the special difficulties from which this industry suffers—difficulties which have recently caused contraction and unemployment in the industry—and also that the incidence of this tax places at an advantage goods manufactured from synthetic materials? In view of the fact that for many years the industry has also suffered from difficulties arising from import duties and unfair competition from abroad, will he give it special consideration in his Budget?

Mr. Maudling

As the hon. Member is aware, I am in some difficulty in relation to all these Questions. It is the traditional difficulty of the Chancellor of the Exchequer. All that I can undertake to do is to consider with care all representations that I receive on this point, either from interested parties or from hon. Members.