Value-Added Tax

HC Deb 27 April 1971 vol 816 cc223-5

23. Mr. Madel

asked the Chancellor of the Exchequer whether, following the indication in the Green Paper on Value-Added Tax that newspapers will be exempt, this exemption is intended to apply to the revenue they receive from advertisers as well as the revenue they receive from sales.

Mr. Maurice Macmillan

The form of relief for sales of newspapers has not yet been decided. Advertising revenue is a different matter, but final decisions on coverage will not be taken until nearer the introduction of the tax.

Mr. Madel

Will the Government bear in mind when further considering the matter that certain sections of the Press depend far more heavily on advertising than on sales as a form of revenue, and that if V.A.T. were put on advertising revenue certain sections of the Press would be put in great difficulties?

Mr. Macmillan

My hon. Friend's point is fully understood. If V.A.T. were charged on newspaper advertising the ultimate cost would be in the price of the goods advertised rather than the price of the paper concerned.

Mr. Ashton

Is the Minister aware that if the tax is placed on advertising it will undoubtedly be passed on to the consumer and will be just one more incentive for trade unions to seek further wage increases? Is not this against his policy, or does he expect trade unions to bear the brunt of price increases inflicted by the Government?

Mr. Macmillan

Value-added tax, like purchase tax, selective employment tax and other indirect taxation, is normally part of the cost of the goods concerned. What I was saying was that in this case a value-added tax on advertising would affect not the newspaper in which the advertisement was placed but the goods which were being advertised in that paper.

Mr. Marten

While this may be what the Government want now, if we should go into the Common Market will not the tax be harmonised in Brussels, with a decision taken by the Common Market countries and not by us?

Mr. Macmillan

No decision has yet been taken on the coverage or rates to which the Common Market countries are harmonising the value-added tax. The Green Paper is a purely United Kingdom proposal.

Mr. Barnett

If the exemption system is used rather than the zero rate, does the hon. Gentleman concede that in the case of both newspapers and food it would in effect mean that tax would be payable in exactly the same way as by non-registered purchase tax payers?

Mr. Macmillan

The question of coverage and the form of relief to newspapers has not yet been decided. Food is another matter, and another question.

Mr. Barnett

Will the hon. Gentleman answer the question, just on this one occasion?

Mr. Macmillan

I cannot say what form of relief will be granted to newspapers, which the Question is about. Food is another matter altogether, and not the subject of this Question.

Mr. Roy Jenkins

The hon. Gentleman was not asked to say what form of relief was granted. He was asked to look at what followed from whether the exemption system or the zero rate was used. Surely he can follow this argument and answer my hon. Friend.

Mr. Macmillan

It is precisely because the Government have not made up their mind and are looking, and will continue to look, at these matters that we published the Green Paper. We are perfectly prepared to consider different methods of relief for the sales of newspapers, in conjunction with the trade. We are firmly committed to consulting the newspaper trade in general, as we are to consulting other people affected by V.A.T. That is precisely the point of publishing a Green Paper—to give time for reasonable consultations.

24. Mr. Hugh Jenkins

asked the Chancellor of the Exchequer what proposals he has for applying the value-added tax to the entertainment industry and to artistic enterprises in general.

Mr. Higgins

Value-added tax is essentially a comprehensive tax, but decisions on the details of its application to particular sectors will not be taken until nearer the time of introduction of the tax.

Mr. Jenkins

If the value-added tax is put on the entertainments industry, will not this amount to reintroducing entertainments tax, as it were, by the back door? Will the hon. Gentleman give a positive assurance that the V.A.T. will not be exerted on the entertainments industry, or, if it is levied, that some form of exemption will be provided to relieve the industry of the main consequences of the burden?

Mr. Higgins

The form of the tax would be very different from the entertainrnents tax. Exemptions and coverage and so forth are for discussion. That is why the Green Paper has been issued. If there are particular points which the hon. Gentleman wants to bring to our attention, then that is the purpose of the Green Paper.