HC Deb 30 March 1971 vol 814 cc1337-8
11. Mr. Skinner

asked the Chancellor of the Exchequer at what level he estimates that value added tax needs to be introduced to offset the abolition of selective employment tax.

Mr. Maurice Macmillan

This would depend on the coverage of the value added tax.

Mr. Skinner

Although there is a great deal of speculation on what his right hon. Friend intends to do about selective employment tax, will the Minister remind him to confirm that the introduction of value added tax, which hits hardest at old-age pensioners and people on low incomes, will not be introduced at any level?

Mr. Macmillan

Value added tax is being studied on its merits in connection with the context of our review of the whole taxation system, and an announcement will be made in due course when we are ready.

Mr. Burden

Would my right hon. Friend not agree that value added tax is nothing to do with S.E.T. but would replace purchase tax?

Mr. Macmillan

That is a more correct balance, if such a balance can be drawn. A value added tax is an indirect tax on goods and services, and in that sense it is nearer to purchase tax than to selective employment tax.

Mr. Bob Brown

If and when the Government's Election pledge to abolish S.E.T. is carried out, will the Government ensure that the very many price increases imposed under the guise of S.E.T. will be refunded to the consumer?

Mr. Macmillan

It is fair to say that many prices are higher than they would otherwise have been because of selective employment tax. On the other hand, many retailers and others have kept down prices to the best of their ability, and their relief from selective employment tax, whenever it may happen to come, must be considered a factor in their liquidity and other aspects of their business. This is not a matter which we can discuss now.

Mr. Marten

In the meantime, if we are to have a value added tax, would the Government assure us that it will not be placed on food?

Mr. Macmillan

This assurance has already been given, both by myself and by others in the House. I refer my hon. Friend to a Written Answer which I gave on the 15th December last.