HC Deb 25 April 1972 vol 835 cc1256-9
7. Mr. Arthur Lewis

asked the Chancellor of the Exchequer to what extent value-added tax added to fees received by solicitors and barristers will be passed on to the litigants; what he estimates to receive from such a tax; and how much he estimates this will increase the annual costs of the Legal Aid Fund.

Mr. Higgins

As to the first part of the Question, this is a matter for the solicitors and barristers concerned. No estimate of receipts is available. As to the final part of the Question, about £1.75 million a year.

Mr. Lewis

Mr. Speaker, may I say "Thank you" and ask the Minister whether he is aware that it is pretty obvious to all, including barristers, that the tax will be passed on? Even the Lord Chancellor and the barristers, who get very high fees and high returns—which the Government never condemn though they condemn the railwaymen—admit that it will be passed on. Does not that shove up costs, which the Government are supposed to be trying to keep down? The Lord Chancellor said that the cost of the judiciary is getting very high. Will not the Minister do something to reduce rather than increase costs?

Mr. Higgins

I am grateful for the hon. Gentleman's thanks. I do not wish to poach on the preserve of my right hon. and noble Friend. It does not necessarily follow that the cost of litigation will be increased by the full amount of VAT. There will be some saving of SET, at least in solicitors' offices. Legal aid charges will continue to be related to means, any additional cost through VAT being borne by the Legal Aid Fund.

9. Mr. William Price

asked the Chancellor of the Exchequer what effect he expects the introduction of value-added tax to have on Exchequer revenue from the sale of beer.

Mr. Higgins

This will depend on the extent to which the revenue duty on beer may be altered when VAT is introduced, which in turn will depend on the total revenue required from beer in 1973–74.

Mr. Price

Does not the hon. Gentleman agree that the licensed trade already carries a formidable level of taxation and that there must be a limit to what even beer will stand? Will he give an assurance that the introduction of value-added tax will not mean yet another burden on a very long-suffering section of the public?

Mr. Higgins

As my right hon. Friend made clear in his Budget speech, in deciding the extent to which he can make any reduction to avoid an increase in the total level of taxation on the item concerned he must take account of the economic circumstances of the time. I cannot anticipate his Budget Statement next year in this respect.

Sir G. Nabarro

Would not my hon. Friend consider that a suitable solution would be the reclassification of beer as food, notably the reclassification of Guiness as food, which indubitably it is?

Mr. Higgins

I regret to say that I could not go along with my hon. Friend's suggestion. As to the definition problem, there are revenue questions that must be taken into account.

Dr. Gilbert

As the Chancellor's stated object is to bring about simplification of the tax system, why does he insist on taxing beer twice? Why not tax it through the VAT system and forget about Excise duties. Why create extra administrative costs which are bound to raise the cost and eventually the price of beer?

Mr. Higgins

I do not think that would be a more advantageous solution. No doubt we can discuss the matter in detail on the Finance Bill.

10. Mr. R. C. Mitchell

asked the Chancellor of the Exchequer whether he will propose that educational aids and equipment be exempt from payment of value-added tax.

30. Mr. Winterton

asked the Chancellor of the Exchequer if he will exempt from the proposed value-added tax all education materials and equipment used in any educational establishment both in the maintained and private sectors.

Mr. Higgins

My right hon. Friend's proposals for exemption from value-added tax are contained in the Finance Bill and there will be opportunity to discuss them during the debates on the Bill.

Mr. Mitchell

Is the hon. Gentleman aware that because of shortage of money many local education authorities are already cutting back very severely on the amount of equipment supplied to schools? Does not the imposition of VAT make the position a jolly sight worse?

Mr. Higgins

It does no such thing. If the hon. Gentleman looks at Clause 15 of the Finance Bill, he will see that there are proposals for local authorities to be refunded VAT paid on purchases relating to their non-business activities, including education.

Mr. Winterton

Does my hon. Friend agree that it would be very wrong for private schools to be penalised in any way, and that students in full-time education without a grant could also be hit very badly by the tax? Will he give an assurance that these items will not be taxed under VAT?

Mr. Higgins

No, Sir. The specific proposals are set out in the Bill. The private sector of education will benefit from the general reliefs for such items as fuel, books and new construction, which are to be zero-rated, and rents and insurance, which are to be exempt. Those schools which are charities will be able to benefit from the concessions on estate duty and capital gains tax which are being proposed.