HC Deb 25 July 1972 vol 841 cc1509-12
2. Dr. Stuttaford

asked the Chancellor of the Exchequer what is his latest estimate of the revenue that will be raised in a full year by value added tax; and how this compares with the loss in revenue in a full year resulting from the abolition of selective employment tax and purchase tax.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin)

I would refer my hon. Friend to table 17 in this year's Financial Statement.

Dr. Stuttaford

I have no doubt that the figures will at first sight appear satisfactory, but does my hon. Friend agree that there are still problems to be sorted out in the retail trade so that retailers shall not make an unfair profit by adding all stages of VAT together before they put on their mark-up or lose by having to pay tax twice?

Mr. Jenkin

On the first point, I assure my hon. Friend that experience in other countries which have introduced VAT has shown that if retailers make that elementary mistake about VAT, they will quickly discover it as they lose out to their competitors. On the second point, I am glad to be able to reiterate on the question of sale or return arrangements that the Customs and Excise is very ready to look at any reasonable arrangements which the trade associations may wish to put forward.

Mr. Sheldon

But since the revenue obtainable from VAT is only roughly 10 per cent. of all the revenue that the Government raise, and since the introduction of the Finance Bill has been a massive effort for such a small amount of money in comparison with the total revenue raised by the Government, will the hon. Gentleman say whether he intends to use VAT as a greater source of revenue than the purchase tax and SET that it replaces?

Mr. Jenkin

For right hon. and hon. Gentlemen on the Opposition side, who put up indirect taxes on no fewer than seven separate occasions when they were in office, I can well understand that that must appear to be a temptation. However, the hon. Gentleman will not tempt me into anticipating any statements which may be made by my right hon. Friend.

Mr. Geoffrey Finsberg

Can my hon. Friend say whether the Inland Revenue and Customs and Excise are prepared to accept that existing sale or return schemes may continue to exist under the new provisions of purchase tax and VAT?

Mr. Jenkin

As my hon. Friend the Financial Secretary told my hon. Friend the Member for Hampstead (Mr. Geofffey Finsberg) in the debate on his Amendment, it is not intended to disturb existing sale or return arrangements.

Mr. Robert C. Brown

Does the hon. Gentleman intend to do anything about the highway robbery inflicted on the consumer in that he has already paid purchase tax and will now have to pay VAT on television rental?

Mr. Jenkin

As usual, the hon. Gentleman is two or three weeks behind the times. We have taken powers in the Finance Bill to make arrangements to deal with the renting of television sets.

4. Mr. William Price

asked the Chancellor of the Exchequer what estimate has been made of the revenue likely from value added tax on sport in a full year.

41. Mr. Goodhart

asked the Chancellor of the Exchequer what estimate he has made of the revenue that will be earned from value added tax on sports clubs in a full year.

Mr. Patrick Jenkin

I have nothing to add to the answer given to the hon. Member for West Ham, North (Mr. Arthur Lewis) on 2nd May by my hon. Friend the Financial Secretary.—[Vol. 835, c. 111.]

Mr. Price

As the Government are determined to squeeze every last penny out of sport through VAT, will the Chief Secretary seek to put something back by other methods? Why not start by building a great new sporting complex, especially in view of the need to get rid of that ageing and outdated relic, Wembley Stadium?

Mr. Jenkin

The hon. Gentleman is being a little unfair. We have doubled the grant to the Sports Council since the General Election. Purchase tax on sporting equipment, which was 25 per cent. when right hon. and hon. Gentlemen opposite took office and which was increased to three separate stages to 36⅔ per cent., is today 25 per cent. That is equivalent to a 19 per cent. rate of VAT. We are proposing to tax it at 10 per cent.

Mr. James Hamilton

Will the hon. Gentleman take it from me that the Scottish Football Association now recognises that if VAT is added it will mean the demise of many football clubs in Scotland, which is the home of football? Will the hon. Gentleman also reconsider his answer to my hon. Friend the Member for Rugby (Mr. William Price) in relation to Wembley Stadium and give similar consideration to Hampden, which is vitally in need of money if it is to retain the interest of football in Scotland?

Mr. Jenkin

I have great sympathy for the problems facing football in Scotland. I will not be drawn into the problems of individuals grounds. They are not matters for the Treasury. The fact is that VAT is a comprehensive tax, and it would be quite wrong to give special treatment under it for consumer spending on certain kinds of leisure activities.

10. Mr. Adley asked

the Chancellor of the Exchequer to what extent the invisible export-earning content, represented by overseas visitors staying at British hotels, will be exempt from value added tax.

Mr. Patrick Jenkin

Overseas visitors staying at British hotels will be charged value added tax just as United Kingdom visitors to foreign Hotels pay VAT.

Mr. Adley

Notwithstanding the attempts by the Opposition to denigrate the value of invisible exports, does my hon. Friend agree that the main objective of VAT is to assist exports and that the tourist industry is our largest single dollar earner? It is not incongruous that by this decision our largest single dollar-earning industry is likely to be put into difficulties in terms of its competitive position vis-à-vis the European tourist industry? Will my hon. Friend keep it under review?

Mr. Jenkin

I cannot accept that proposition. I appreciate that my hon. Friend knows a great deal about the tourist industry. However, he is greatly underestimating the capacity of our tourist industry to continue to break all records in attracting tourists from overseas.

Mr. Ashton

If the present Government allow prices to go on rising as fast as they are at present, there will not be a tourist industry next year. Is the hon. Gentleman aware that within 100 yards of this House people arebeing asked to pay 13p for a half of larger, 15p for a can of Coke and 10p for a small ice cream? There is blatant exploitation going on and tourists are being robbed every day. When does the Minister intend to do something to protect tourists and futuredollar earners?

Mr. Jenkin

This seems to be a part of our earnings from tourism, on the value of which I thought both sides of the House were agreed.