PURCHASE TAX (Hansard, 21 July 1971)

§ The Minister of State, Treasury (Mr. Terence Higgins)

I beg to move, That the Purchase Tax (No. 3) Order 1971 (S.I. 1971 No. 1078), dated 5th July 1971, a copy of which was laid before this House on 9th July, be approved. The reduction in all the rates of purchase tax announced by my right hon. Friend the Chancellor on 19th July is effected statutorily by the Purchase Tax (No. 4) Order, 1971, laid before the House on that day. That does not supersede or render any less necessary the present minor detailed alterations which we had introduced earlier and which I am now commending to the House. There is, of course, the connection that both the rates appropriate to the two groups with which this Order is concerned have been reduced. The reduced 30 per cent. rate will, as from Tuesday, 20th July, apply to the one item where we have extended the scope of the tax instead of 36⅔ per cent. as it has been since 12th July when the (No. 3) Order came into effect.

The effect of this Order is to introduce some minor adjustments to the purchase tax coverage at three points with a view to providing certain new reliefs and to removing a particular anomaly which has come to our attention. The correction of the anomaly involves increasing the scope of the tax to a very small degree and that is why it is necessary to have this Motion. It is desirable not to delay items of this kind and the Treasury Order procedure is provided for under the Purchase Tax Act, 1963, so that they can be dealt with at any time when it is evident that something needs to be done.

The first and third alterations are reliefs for certain equipment for invalids and the second is the correction of the anomaly. If the House is agreeable, I think it would be convenient if I discussed the first and third alterations together.

As regards the first, adjustable beds, Group 11 of the Purchase Tax Schedule charges furniture of a domestic nature. There are on the market certain adjustable beds, either mechanically or electrically operated, which are designed for invalids. In so far as these beds are advertised as suitable and sold for use 1594 in the home they fall within the description of domestic furniture, although they have much in common with certain hospital beds which are already outside the tax as non-domestic. It is to remove the rather artificial restrictions on their use and advertising that this Measure has been introduced. The list of exempt invalid aids to which the item is added was introduced in the summer of 1965 and I understand that this special sort of bed has been developed since then, so that what we are doing is, in effect, bringing the list up to date.

The third alteration introduces a new exemption from the charge under Group 12 on domestic appliances and apparatus. As the House will see, the new exemption is for chair lifts, stair lifts and hoists and lifters, provided that they are specially designed for invalids.

This exemption is being introduced for the same reason as the one for adjustable beds. These lifts are needed to enable certain disabled people to lead a more normal life and to be less dependent on other persons. The types of hoists for use in a hospital or as means of getting in and out of cars were already tax-free as non-domestic, but the use of similar articles in the home and the advertising of these articles for use in the home rendered them liable to tax as domestic articles on a par with pieces of ordinary domestic equipment. This was obviously not a particularly desirable state of affairs, and both my hon. Friends the Members for Edinburgh, North (Earl of Dalkeith) and Westbury (Mr. Walters) and the hon. Member for Eccles (Mr. Carter-Jones) have drawn attention to it. We also received representations from the Joint Committee on Mobility for the Disabled urging us to take action. I am sure that the general feeling of the House is in favour of this new exemption.

Turning lastly to the item where the scope of the tax is being extended, I come to parts of and accessories for waste disposal units. As I have already said, Group 12 of the Purchase Tax Schedule places a charge on domestic appliances and apparatus in general, and complete waste disposal units for use with the domestic sink are, therefore, taxable. However, the situation has arisen where, quite legitimately, one particular organisation has been able to regulate its affairs in such a way that 1595 two incomplete halves of a waste disposal unit are supplied by two separate companies in response to two separate orders.

In these circumstances, the Customs and Excise was unable to hold that either of the transactions attracted any tax because neither company's product was itself a domestic appliance, though one could very well see that it was part of one. We considered that action to remedy this situation was necessary because of the distortion of the market it produced. Other companies, for technical reasons being unable to adopt the same ploy, were losing business. This is the reason for introducing the charge, to put matters right. The amount of revenue involved is minimal.

If I have leave, I shall be glad to deal with any points which may be raised during this debate, but I have tried as briefly as possible to explain why we thought these amendments were necessary. For the reasons I have given, I ask the House to approve the Order.