HC Deb 25 April 1972 vol 835 cc1262-3
15. Mr. Leslie Huckfield

asked the Chancellor of the Exchequer what proposals he has for removing purchase tax or value-added tax from safety equipment.

Mr. Higgins

While the position has been carefully reviewed from time to time, it has proved impossible to remove purchase tax from all articles which contribute to safety. There will, of course, be an opportunity to discuss details of the application of value-added tax during the debates on the Finance Bill.

Mr. Huckfield

Does the hon. Gentleman realise that most pieces of safety equipment were carrying no purchase tax advantages, despite the pleadings of the British Safety Council and the Royal Society for the Prevention of Accidents? Will he take the opportunity, when introducing the new tax, to give positive encouragement through the fiscal system to increased industrial safety?

Mr. Higgins

I am aware of the hon. Gentleman's deep interest in this subject. When a purchase tax order on this subject came up for consideration after I joined the Treasury, I looked into the matter very carefully but tremendous difficulty has been found in acting on the lines suggested by the hon. Gentleman. However, trade and industry generally will be in a better position under the value-added tax than under purchase tax as regards items of safety equipment they buy in the course of business. Under purchase tax any charge had to be borne by the firm whereas, under the value-added tax, the items will be eligible for credit under the normal credit mechanism.

Rear-Admiral Morgan-Giles

Without giving any undertaking will my hon. Friend consider, during the passage of the Finance Bill, proposals to exempt the equipment and boats of the Royal National Lifeboat Institution?

Mr. Higgins

I would not wish to anticipate debates on the value-added tax during the Finance Bill.

Dr. Gilbert

Nevertheless there are pieces of safety equipment which are free of purchase tax and which will now incur taxation for the first time. Since Governments in the past have always been under pressure to subsidise them, is it not a retrograde step now to tax them? Will the hon. Gentleman refer to his previous answers on this matter and say that we can expect some sensible concessions during the Finance Bill?

Mr. Higgins

The lesson is really to be drawn from the time when purchase tax was introduced. Then, a number of piecemeal exemptions were made which resulted in a great many anomalies. As I have constantly stressed, the value-added tax is intended to be a comprehensive tax, but a high percentage of the items to which the hon. Gentleman refers which are subject to purchase tax will be in a better position under the value-added tax because of the credit mechanism.