§ Q1. Mr. Martenasked the Prime Minister if he is satisfied with the co-ordination between Ministers responsible for sponsoring the service industries as defined in the regulations relating to selective employment tax; and if he will make a statement.
§ Q3. Mr. Emeryasked the Prime Minister what representations he has received about the proposed increase in selective employment tax from the co-operative societies; and what answer he gave.
§ The Prime Minister (Mr. Harold Wilson)My right hon. Friend the Chancellor of the Exchequer works closely together with those of my right hon. Friends who are concerned with the industries affected.
I have received seven letters from co-operative societies on this subject. The replies have explained the reasons for proposing to increase the selective employment tax this year rather than increase other forms of taxation.
§ Mr. MartenBefore we debate the subject next week, will the Prime Minister say why he is satisfied with the co-ordination between Ministers—which is 1638 my Question—as the selective employment tax seems to have an effect often diametrically opposed to the very policies which his other Ministers are trying to implement? Is the right hon. Gentleman really so sure that he knows what is going on between his Ministers?
§ The Prime MinisterYes, Sir. The reason I said that I was satisfied about co-ordination is that I am satisfied about co-ordination. All taxes are bound to have some adverse effects. The hon. Gentleman, who is committed with his right hon. Friends to the abolition of the selective employment tax, now has the duty of finding or proposing how to find revenue of about £600 million a year, which would put up the standard rate of income tax to 10s. in the £ or increase purchase tax by more than 50 per cent., through all the categories covered.
§ Mr. EmeryWhy will not the Prime Minister admit that the selective employment tax on the co-operative societies in the retail distributive trade is a direct increase in the cost of living, and why will not he admit that this tax is defective, damaging and disgraceful?
§ The Prime MinisterMy right hon. Friend the Chancellor explained by how much more the cost of living would be increased if the same revenue were to be raised by, for example, the purchase tax. As regards alternatives, in relation to the co-operative societies, I draw the hon. Gentleman's attention to the speech made by a Co-operative Party Member of Parliament, one of my hon. Friends, who said that compared with the S.E.T. the Tory proposal for a value-added tax would make the S.E.T. look like a measure of consumer protection for co-operative societies.
§ Mr. PavittWill my right hon. Friend keep his mind wide open to representations from co-operative societies, bearing in mind in particular the two factors of which he is well aware, one, that they are non-profit making publicly owned concerns, and, two, that they cannot work on profitability but they must work on service, especially in rural areas in the delivery of milk and bread?
§ The Prime MinisterYes Sir; those two points were excellently made by my hon. Friend and others of my hon. Friends when they came to see me about this 1639 matter a few weeks ago. However, since the House will have an opportunity, as my right hon. Friend the Chief Secretary said, to debate the matter next week, I think that it would be a little disorderly on my part at Question Time to seek to anticipate what my righ hon. Friends may say in reply to such points.