HC Deb 14 December 1971 vol 828 cc249-50
22. Mr. Booth

asked the Chancellor of the Exchequer whether stocks of footwear on which purchase tax has been paid, held in stock by shops, will be exempted from value-added tax in the legislation which he is to propose.

Mr. Maurice Macmillan

I have nothing to add to the answer given by my hon. Friend the Financial Secretary to the hon. Member for Birmingham, Ladywood (Mrs. Doris Fisher) and my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) on 26th October.—[Vol. 823, c. 281.]

Mr. Booth

Will the Minister accept that, unless an early guarantee is given that there will not be double taxation on footwear in shops on the day when value-added tax is introduced, there will shortly be a rundown in orders so as to run down stocks to avoid double taxation? This will disrupt the production of shoe-making factories and increase unemployment and short-time work in areas where the unemployment situation is already intolerable.

Mr. Macmillan

We are carefully considering all the representations and suggestions which have been made by the trade. We have asked all those concerned to make representations to Customs and Excise. These are difficult matters and my right hon. Friend is not yet in a position to announce a decision.

Sir G. Nabarro

May I press my hon. Friend on this matter? Does he recall that many months ago we raised with him the question of a simple charge in respect of purchase tax paid on stocks admitted against an assessment of value-added tax, all of which is utterly practicable? Unless there is an announcement soon, it will not only be boots and shoes, it will be the whole gamut of manufactured goods, with a consequential great increase in unemployment.

Mr. Macmillan

My hon. Friend, as he said, some months ago made relatively simple proposals. These have been discussed with the trades concerned but have turned out to be not quite so simple as seemed at first sight. Customs and Excise are anxious, in coming to a satisfactory arrangement about this, to meet the manufacturers concerned as far as possible.

Mr. Joel Barnett

Does not the hon. Gentleman agree that serious hardship is likely to be caused to small companies in comparison with chains of companies with parent manufacturing companies who carry stocks which are not subject to purchase tax? Even more important is the economic effect of the running down of stocks on unemployment and consumer demand. It is important that the Minister should not give the non-replies which we have had today but should make a clear statement very soon.

Mr. Macmillan

We are very much aware of the problem, including the special points made by the hon. Gentleman. The complication of such matters makes it so important to come to a correct solution first, rather than to make an announcement before one has been reached which will be fair and satisfactory to all concerned.