§ 17. Mr. Boyd-Carpenterasked the Chancellor of the Exchequer what consideration he is giving to bringing the level of direct taxation into line with that ruling in the countries of the European Economic Community, in order to 285 facilitate this country's entry into the Community.
§ Mr. CallaghanAs I said in my Budget statement—[Vol. 744, c. 1002]—preliminary work on these matters is in hand.
§ Mr. Boyd-CarpenterIf the Government are really serious about an early entry into the Community, ought not work to be very far advanced in modifying a position in which, according to the Financial Secretary, a man with a higher salary in this country keeps only one-third of what his European opposite number keeps?
§ Mr. CallaghanIt depends what is meant by a "higher salary". At £5,000 per annum, for example, someone in this country would retain more than his opposite number in West Germany. But perhaps that is not a "higher salary".
§ Mr. ShinwellDo I understand, from what my right hon. Friend said about preliminary arrangements for the reorientation of direct and indirect taxation, that we are to take it that the Government are proposing some day to reduce direct taxation and increase indirect taxation, which will fall heavily on those with low incomes?
§ Mr. CallaghanI do not think that that deduction could have been drawn from my Answer. Certainly I should think that the country ought to consider for a very long time before it alters its direct tax arrangements in the way proposed. It seems to me that some right hon. and hon. Gentlemen opposite are less concerned with getting into the Common Market than with getting reduced the tax burdens on their highly paid friends.
§ Sir T. BeamishHas the Chancellor made any preparation for the introduction of an added value tax, in accordance with Common Market practice?
§ Mr. CallaghanNo, Sir. After all, we do not yet know whether we are going into the Common Market, nor do we know whether a value added tax will be accepted by Common Market countries. Apart from putting preliminary work in hand to ensure what would be necessary, I think that it would be foolish of me to go further than that.
Mr. J. T. PriceBefore my right hon. Friend the Chancellor allows himself to 286 be drawn into detailed arguments about adjustments in direct taxation to harmonise with the practice on the Continent, will he bear in mind that in E.E.C. countries indirect taxation is a much higher imposition on ordinary working people than in this country? The sales tax and things like that are a fundamental distinction, as against the practice in this country. I hope that he will not be led astray by people on the other side of the House who do not want to get into the Common Market as much as they want to get out of their tax obligations?
§ Mr. CallaghanMy hon. Friend seems to be repeating my previous answer. I am very ready to get into a discussion on this. I am not ready to see the substantial transfer of burdens from the wealthiest in this country on to the backs of others under the pretext of getting into the Common Market.
§ 26. Mr. Allasonasked the Chancellor of the Exchequer what was the revenue from tariffs on imports from European Economic Community countries for 12 months to the latest convenient date.
§ Mr. MacDermotProtective duty receipts are not identified by country of origin of the goods concerned and I cannot give a precise figure; but for 1966 it was of the order of £70 million.
§ Mr. AllasonIs it not rather important to ascertain this figure, since presumably this will be a direct loss to the Exchequer in the event of our joining the Common Market? Is it not likely that this will be a very much larger figure as the country of origin of imports will tend to switch from other countries to European countries?
§ Mr. MacDermotI do not think that follows. It is one of the factors which will have to be taken into account, but there will be other offsets, including direct revenue ones, such as the additional tariffs on imports from other countries.