HC Deb 16 November 1971 vol 826 cc192-3
2. Mr. Hardy

asked the Minister of Agriculture, Fisheries and Food what representations he has received regarding the application of value-added tax upon foodstuffs.

Mr. Prior

I have received a number of representations on this subject.

Mr. Hardy

Did the representations received by the Minister contain any expression of anxiety on this matter? Will he make clear to the House that neither foodstuffs nor the processing and distribution of foodstuffs will incur V.A.T. and that the Government intend to keep the explicit pledges which were given?

Mr. Prior

The Chancellor of the Exchequer has already stated that food will be relieved of the tax, except perhaps for items now subject to purchase tax. It is not yet known what system of relief from V.A.T. we shall adopt, and much depends on that.

Mr. Charles Morrison

There are certain items which are now subject to purchase tax, such as potato crisps and chocolate-covered biscuits. Does not my right hon. Friend agree that when the tax system is changed there will be a strong case for the remission of tax on these articles of foodstuffs, except for luxury items?

Mr. Prior

I have noted what my hon. Friend said. His views are shared by the food manufacturers.

Mr. Barnes

When will an announcement be made on whether food will be exempt from V.A.T. or will receive a zero rating? Does not the Minister agree that this is a matter of the utmost importance? If food is exempt rather than zero-rated, manufacturers will not get back tax paid on machinery, packaging and other inputs into their product, and that could increase the price of food products by as much as 40 per cent. of the rate of V.A.T.

Mr. Prior

If that happened, the Government's commitment not to tax food would not be honoured. The hon. Gentleman asked me when an announcement will be made. That is not for me, but I will convey his remarks to the Chancellor of the Exchequer.