HC Deb 25 April 1972 vol 835 cc1248-9
2. Mr. Dixon

asked the Chancellor of the Exchequer whether the base used for calculating the United Kingdom's contribution in value-added tax to the European budget will be the same as in other countries of the Common Market.

Mr. Higgins

Any contribution to the EEC budget derived from the value-added tax would be related to a uniform tax base. Such a base does not yet exist. The United Kingdom's contribution to the EEC budget up to 1980 is in any case the subject of transitional arrangements set out in Articles 129 to 132 of the Treaty of Accession.

Mr. Dixon

Does it follow from that answer that although we in this country will be able to decide the rate of VAT, we shall not, in effect, be able to decide the base of VAT?

Mr. Higgins

This matter will of course be discussed in the Community. I do not anticipate that a decision on the harmonised base will be taken immediately and I cannot forecast a timetable on the subject. However, as I say, there will be full consultation on this point.

Sir G. Nabarro

Will my hon. Friend bear in mind that all the countries of the EEC levy VAT on food whereas it is the intention of Her Majesty's Government so far to exclude food? How can we have a common and uniform base for VAT if the basis of calculation is manifestly different between the EEC and this country?

Mr. Higgins

As I have sought to make clear, it will be a question of reaching agreement on what the harmonised base should be.

13. Mr. Deakins

asked the Chancellor of the Exchequer when he expects to have completed his study of the implications of the European Economic Community decision to raise farm prices for 1972–73.

Mr. Patrick Jenkin

I have nothing to add to the very full answer which my right hon. Friend the Minister for Agriculture gave on 11th April to the hon. Member for West Ham, North (Mr. Arthur Lewis).—[Vol. 834, c. 166–9.]

Mr. Deakins

Will the study, if and when it takes place—that is not certain—include an assessment of the effect on our balance of payments following the increase in the size of Community budget and our share of it consequent upon these price rises?

Mr. Jenkin

As my right hon. Friend said, we must take the interaction of the relative movements of world and Community prices. As he told the House on 11th April, the combined effect will be to reduce the estimates of the cost of food importants that were given in last year's White Paper.