Selective Employment Tax (Hansard, 7 July 1970)

§ 3. Mr. Lomas
asked the Chancellor of the Exchequer when he intends to introduce measures to implement his policy regarding selective employment tax and direct taxation; and what are his proposals on maintaining the revenue.

§ 6. Mr. Dalyell
asked the Chancellor of the Exchequer if he will give his time-table for the phased abolition of selective employment tax.

§ 19. Mr. Eadie
asked the Chancellor of the Exchequer what proposals he has for abolishing selective employment tax.

24. Mr. Bob Brown
asked the Chancellor of the Exchequer what are his proposals in regard to selective employment tax.

§ Mr. Iain Macleod
The Government's pledge to abolish S.E.T. is firm and and arrangements to implement it will be laid before the House in due course. As regards direct taxation, I shall announce my detailed proposals at the appropriate time.

§ Mr. Lomas
Does not the Chancellor agree that a reduction of, say, 6d. in direct tax and abolition of S.E.T. would amount to around £800 million? How can he take that out of revenue and maintain the social services at their present standard without imposing additional taxation? Has he value-added tax in mind?

§ Mr. Macleod
There is no precise equation. There is a relationship between public expenditure and taxation proposals, as my right hon. Friend the Prime Minister made quite clear in his speech.

§ Mr. Dalyell
However firm the decision, will the Chancellor reflect perhaps that selective employment tax is easily the cheapest tax to collect in terms of the Inland Revenue and reflect that any alternative tax might involve more, not fewer, civil servants to collect it?

§ Mr. Macleod
That is a fair point. The only thing I can say in favour of S.E.T. is that it is relatively a cheap tax to collect.

§ Sir T. Beamish
Does my right hon. Friend agree that the best way of maintaining the revenue is to get some growth 467 into the economy? Is he aware that in the last five years we have had the lowest growth rate in the whole of free Europe?

§ Mr. Macleod
Yes, that is exactly right, but, with respect to my hon. and gallant Friend, I would not limit it only to growth. I think it is of first importance to encourage savings as well.

§ Mr. Barnett
Will the Chancellor give a guarantee that he will not be replacing S.E.T. with an employment tax?

§ Mr. Macleod
No. We have Questions later in relation to value-added tax. What we have said is that in any event the selective employment tax will go, but, in the words of the manifesto, it may be as part of a wide-ranging review of indirect taxation.

§ Mr. Biffen
With reference to the second part of the Question asked by the hon. Member for Huddersfield, West (Mr. Lomas)—that of maintaining the revenue—does my right hon. Friend agree that a very prudent regard to economic management must lead him critically to examine the present size of the surplus and to consider whether the maintenance of this surplus is having a detrimental effect on the liquidity of the economy generally?

§ Mr. Macleod
Yes, indeed, and that is a factor in the examinations which we are carrying out.

§ 25. Sir D. Walker-Smith
asked the Chancellor of the Exchequer whether, prior to any general legislation in regard to selective employment tax, he will initiate immediate legislation for the repeal of section 51(9) of the Finance Act, 1969 which retrospectively reverses the decision of the Appellate Committee of the House of Lords in Secretary of State for Employment and Productivity versus C. Maurice and Company Limited, Bishop's Stortford, rejecting the Minister's appeal against the decision of the Court of Appeal in favour of the Company.

§ The Financial Secretary to the Treasury (Mr. Patrick Jenkin)
No, Sir. My right hon. Friend is reluctant to embark on a series of minor amendments to S.E.T. He has given a firm pledge to abolish the tax.

§ Sir D. Walker-Smith
While appreciating the firm pledge, may I ask whether my 468 hon. Friend does not agree that anything which carries a degree of inequity cannot be called minor and should not be called minor in this House? Has he observed the words of the Master of the Rolls in the Court of Appeal pointing out that the law as it now stands confers an unfair advantage on the public sector over the private sector, and, in view of that, will my hon. Friend be good enough to reconsider his answer?

§ Mr. Jenkin
I have some sympathy with my right hon. and learned Friend's point, but if we were to devote our attention to correcting all the unfairnesses and anomalies in the selective employment tax we might never have time to get round to abolishing it.

§ Mr. Hugh Jenkins
Will the hon. Gentleman confirm that where it has already been decided to correct some inadequacies or mistakes in the application of the selective employment tax—for example, in relation to removing it from the theatre—and where that is currently being carried out, there is no intention of altering that decision and that such decisions already taken will continue?

§ Mr. Jenkin
The hon. Gentleman may have that assurance.

§ 26. Mr. Kaufman
asked the Chancellor of the Exchequer by what date he intends to complete the abolition of selective employment tax; and what reduction he estimates this will bring about in the Index of Retail Prices.

§ Mr. Patrick Jenkin
In reply to the first part of the Question, I would refer the hon. Member to the answer my right hon. Friend gave the hon. Member for Huddersfield, West (Mr. Lomas) earlier today.
On the second part, it is estimated that S.E.T. represents about 1 per cent. on the retail price index.

§ Mr. Kaufman
Does the Minister recall the Prime Minister's television statement earlier this year that selective employment tax will be abolished in the first Budget and his further statement on television last month: I give you my word and I will keep my word"? Will the Minister confirm that the Prime Minister's second statement will govern action on his first statement?

§ Mr. Jenkin
My right hon. Friend has made it clear that the selective employment tax will be abolished without undue delay.

§ Mr. Taverne
Is it not clear from the second answer which the Financial Secretary gave that the selective employment tax has had less effect on the retail price index than have other forms of indirect taxation?

§ Mr. Jenkin
It does not necessarily mean that it is a better tax.