HC Deb 25 April 1972 vol 835 cc1259-62
14. Mr. Stallard

asked the Chancellor of the Exchequer what representations he has received from retailers since making his proposal to reduce purchase tax on some goods.

Mr. Higgins

A very few representations have been received about losses incurred by retailers on stocks which have borne tax at the higher pre-Budget rates. In general the reductions have been welcomed as a stimulus to trade which should enable retailers to recoup any immediate losses through increased business in future.

Mr. Stallard

Is the hon. Gentleman aware that many small retailers, particularly pharmacists and electrical supply retailers, have suffered considerable loss as a result of the method chosen to reimburse them following the last reduction of purchase tax? Is he further aware that some of these losses have amounted to £1,500 to £2,000? Will he consider an alternative method—for instance, reimbursement based on invoices over the six or seven weeks previous to the Budget? Would this not have been a better method of reimbursing the tax?

Mr. Higgins

I must confess that I am not clear as to what the hon. Gentleman means by reimbursing retailers for the tax. There is always a problem with purchase tax when there is a cut in the rate although, as my right hon. Friend pointed out in his Budget Statement, it is not a difficulty which arose very much under the last Government. The problem was examined in great depth by the Hutton Committee in 1952 and it concluded that there should not be any special arrangements in circumstances of this kind.

20. Dr. Stuttaford

asked the Chancellor of the Exchequer what was the annual revenue in purchase tax from the sale of children's shoes in 1971.

Mr. Nott

Young children's shoes are not subject to purchase tax. Older children may wear a size of shoe which bears tax but it is not possible to estimate how much of the annual purchase tax revenue this represents.

Dr. Stuttaford

Would my hon. Friend agree that it appears that this country's finances have struggled along without taxing babies, and children's shoes in the past? Would he further agree that this tax would add 50p to the price of a pair of shoes for an eight-year-old which would encourage mothers to by second hand shoes, cheaper shoes or ill-fitting shoes, thereby hazarding the health of their children? Would he agree that this tax will bring into disrepute the VAT system because it would be a prescription charge on the health of children's feet? [Hon. Members: "Hear, hear."]

Mr. Nott

With respect, some of my hon. Friend's comments are a little exaggerated. [Hon. Members: "No."] I cannot comment on his estimates of the amount this would add to the price of children's shoes. These points were borne in mind when VAT was designed and we have to look at the tax as a whole. Bearing in mind the abolition of SET and purchase tax there are no grounds for suggesting that value-added tax will be regressive when looked at as a whole.

Dr. Summerskill

Would the hon. Gentleman perhaps take some medical advice—[Hon. Members: "Hear, hear."]—and would he not look so amused at the fact that ill-fitting shoes can cause lifelong deformity? Would he not agree that the days should have gone when the Government turn back the clock and encourage the wearing of ill-fitting shoes? In the long run, if we cannot appeal to him on humanitarian grounds, will he recognise that economically it will be a long-term burden on the National Health Service to cope with these deformities?

Mr. Nott

I would be happy to take medical advice from the hon. Lady at any time but these matters can be fully debated when we come to the relevant Clauses of the Bill and I suggest that we wait until then.

Mrs. Kellet-Bowman

When my hon. Friend described the remarks of the hon. Member for Norwich, South (Dr. Stuttaford) as exaggerated, had he read the report called "Crippling the Young" relating to the deformities caused to children's feet by ill-fitting footwear?

Mr. Nott

I have not read that report but I would be delighted to do so if my hon. Friend would send it to me.

Mr. Healey

The hon. Gentleman has said frequently that these matters can be discussed when we come to consider the Finance Bill. Does he recall that the Chancellor of the Exchequer made a statement during the debate last week suggesting that the Government would not be prepared to consider any further zero-rating because they regard the composition of the value-added tax as at present devised to be unchangeable? Can he assure the House that the Government will listen to arguments put by Members on both sides on this and other matters and will be prepared, if the weight of the argument lies in that direction, to consider zero rates for commodities such as children's shoes and clothes which at present the Government propose to tax at 10 per cent.?

Mr. Nott

I heard my right hon. Friend's remarks in the debate and I do not think he put them in the way the right hon. Gentleman suggests. When we come to this matter on the Finance Bill there will be full opportunities for debating it and we will certainly listen to all the arguments.