§ 15. Mr. Barnettasked the Chancellor of the Exchequer if he will introduce legislation to change the title of purchase tax and describe it as a value-added tax.
§ Mr. DiamondNo, Sir. I think this would lead to confusion.
§ Mr. BarnettAs both taxes are on consumer expenditure but one is a multistage nightmare of a tax and the other a simple single-stage tax, would it not be as well and help towards our eventual entry to the Common Market if we called purchase tax a value-added tax?
§ Mr. DiamondI do not know whether my hon. Friend was making the point that this is a sweet-smelling rose, but the fact is that it is not a tax on value-added, although I agree with him, and we are grateful to him for pointing out, that there are many similarities.
§ Mr. Kenneth BakerWould the right hon. Gentleman tell the Chancellor of the Exchequer, before he makes any speeches against a value-added tax in the country, that 40 per cent. of the trade of this country is carried on with countries which have a value-added tax system, and to the extent that a value-added tax helps their exporters it means that our exporters are at a disadvantage?
§ Mr. DiamondI will try to recollect everything that the hon. Gentleman has said so that I can convey it at a suitable time to my right hon. Friend. Meantime, I cannot accept what he says about the effect on exports.
§ 18. Sir G. Nabarroasked the Chancellor of the Exchequer whether he is aware that the lower limit for purchase tax exemption has remained at £500 since 1940, when this form of taxation was inaugurated as a temporary war measure; what was the notional adjusted and comparable figure at 1st December 1969 allowing for declining money values; and what changes he proposes.
§ Mr. DiamondThe original exemption limit of £2,000 was reduced to £500 on 3rd November, 1941, following complaints of unfair competition. Allowing for the change in money values the current equivalent of £500 in 1941 is estimated to be rather more than £1,400. Despite this change, my right hon. Friend is satisfied that £500 is still the appropriate level for this exemption, whose purpose is to exclude cases which would in general involve disproportionate costs of collection.
§ Sir G. NabarroIs it not a fact that grubbing around among thousands of small producers to collect relatively tiny sums of purchase tax leads to uneconomic exercises generally? Could not we have for purchase tax an exercise similar to that which the Chancellor of the Exchequer conducted last April in the context of income tax when a very large number of small payers were relieved?
§ Mr. DiamondThe hon. Gentleman is perfectly right that if those circumstances applied it would be foolish to incur an uneconomic cost. I can assure him that the matter has been looked at. There is no uneconomic cost in collection at the present level. Even at the present level, we get objections by manufacturers on the ground of unfair competition.
§ Mr. Hugh JenkinsWould my right hon. Friend accept the implied compliment of the hon. Member for Worcestershire, South (Sir G. Nabarro) to selective employment tax, which is a much easier tax to collect than the one to which the hon. Gentleman takes exception?
§ Mr. DiamondI am always prepared to accept compliments to Treasury Ministers, but I thought that your predecessor, Mr. Speaker, ruled that any compliment to a Treasury Minister was distinctly out of order.
§ Mr. SpeakerIt is not usual, anyway.
§ Sir G. NabarroIt was not a compliment.