PURCHASE TAX (Hansard, 22 November 1971)

§ The Minister of State, Treasury (Mr. Terence Higgins)
I beg to move, That the Purchase Tax (No. 6) Order 1971 (S.I., 1971, No. 1781), dated 3rd November 1971, a copy of which was laid before this House on 8th November, be approved. The effect of this Order is to make minor amendments to the purchase tax coverage in order to remove a particular anomaly which has come to our attention. It is desirable not to delay dealing with items of this kind, and the Treasury order procedure is provided under the Purchase Tax Act, 1963, so that they can be 1091 dealt with at any time when it becomes evident that something needs to be done.
The order establishes, with effect from 9th November, that disposable tableware of whatever material is within the scope of the tax. To remove any doubt that some might be left out, the order rearranges the classification so that all disposable tableware comes within one group of the list of chargeable goods in the First Schedule to the Purchase Tax Act, 1963, namely Group 5, instead of as hitherto within Group 5 if the tableware was of paper and within Group 11 if it was of some other material such as plastic. The reclassification also removes from the items which were previously chargeable under Group 11 the limitation on the charge to those which were of a kind suitable for office or domestic use. This is a theoretical increase in the scope of the charge and is why it is necessary to have this Motion.
The Order sets at rest doubts which have arisen recently about whether a sort of plastic cup specially designed for use in a beverage dispensing machine could fairly be said to be also of a kind used for domestic or office use, as other plastic cups are. It depends upon how broadly one looks at this question I understand that it was the intention of the previous Administration to tax all these plastic cups.
In the 1969 Budget the tax under Group 5 was extended to apply among other things to "paper cups, paper plates and other tableware", and I understand that the automatic vending trade at that time complained about the effect of this on paper cups for use in their machines. They were told that it was the intention that all cups should be taxed wherever they were used. Some companies manufacturing cups and other tableware complained that this was anomalous while any plastic cups remained outside the pre-existing tax charge under Group 11, and they were assured that henceforward all plastic cups on the market would be regarded as within the tax.
With this background, and in view of the doubts which I have mentioned, it appeared to us that an Order clarifying the tax position was desirable as it would be unreasonable to allow cups specialised for machine use to be tax-free when they could be used in substitution for 1092 non-specialised taxed cups, for instance, in canteens and in domestic circumstances such as picnics. The rate of tax is 11¼ per cent. of the wholesale value, so that quite a significant trading advantage might be involved.
I have spoken principally of cups, but of course a similar problem could arise with plates and other tableware. The order makes it clear that they are all to be treated in the same way.
Hon. Members who are interested in the amenity aspect of this may find a certain irony in the draftsman's use of the word "disposable" as the adjective to describe the throw-away plastic cups and beakers because their ultimate disposal is quite a problem. Be that as it may, the Order will remove the various anomalies of which I have spoken and I hope, therefore, that the House will see fit to approve it.

§ Mr. Joel Barnett (Heywood and Royton)
I am sure the House will be interested in the clarification we have had from the hon. Gentleman. I spoke to an assistant manager in a large department store on Friday to ask him about this aspect of this Purchase Tax Order which came into effect on 9th November. He knew nothing whatever about it, and I am sure he will read with great interest the Minister's speech and that it will be very clear to him what is in the Government's mind.
A large number of Statutory Instruments and orders are coming before the House on all sorts of subjects. It would be useful if explanatory notes on them really were explanatory. I will read this one to the House so that hon. Members will see what I mean: This Order provides for disposable tableware of whatever material to be brought together in one Group of the Schedule of chargeable goods and removes any limitation of the charge to articles of a kind suitable for office or domestic use. Without benefit of the hon. Gentleman's brief explanation a moment ago, I suggest that that explanatory note is, to put it mildly, far from clear. Therefore, I hope that whoever drafts these Orders in future will make them a little clearer.
I understand that these disposable cups and plates and such like are used to a considerable extent for children's parties. Do I take it that these articles which 1093 previously were not taxable will now be taxable?

§ Mr. Higgins
Once again I ask the leave of the House to reply, though in view of the large number of hon. Members present I do so with some trepidation. I will comment on the hon. Gentleman's two points.
I take his point about the Explanatory Memorandum, and there is a tendency to treat these matters as something of a formality. This brings out the point that there is a good case for a Ministerial speech to spell out these Orders in rather more detail, for the benefit of the commercial interests which may be signifi- 1094 cantly affected by the Order before the House. It is right that one should give an adequate explanation of exactly what is happening.
On the aspect of children's parties, what essentially we were concerned with was a doubt which had arisen over vending machine cups. I suppose such articles could be used for children's parties, although I understand that normally they are bought only in very large quantities.