Value-added Tax

HC Deb 28 March 1972 vol 834 cc206-10

5. Mr. Strang

asked the Chancellor of the Exchequer what further consultations he intends to have about his proposals for the introduction of a value-added tax.

21. Mr. Duffy

asked the Chancellor of the Exchequer what consultations have taken place and are proposed in connection with the introduction of value-added tax; and if he will make a statement.

Mr. Barber

Customs and Excise will continue to have consultations with representative trade bodies about the detailed operation of the tax, and to give advice and guidance on any problems connected with it.

Mr. Strang

Is the right hon. Gentleman aware that although in some respects the Government's proposals for V.A.T. are not as bad as many of us feared, there is one matter on which hon. Members on both sides of the House feel that the Chancellor of the Exchequer has made a mistake? Will he assure the House that he is prepared to reconsider the question of not giving a zero rating to the live theatre?

Mr. Barber

This question was put to my hon. Friend the Minister of State in the Budget debate and he dealt with it then. He said quite rightly that there will be an opportunity to raise a variety of such matters in Committee on the Finance Bill.

Mr. Emery

Would my right hon. Friend consider circulating that part of his hon. Friend's statement in the Budget debate in view of the opinion of many hon. Members that value-added tax will succeed only if it has as few exceptions as possible, and does he not appreciate that it is the wish of this House that there shall be as few exceptions as possible?

Mr. Barber

My hon. Friend is absolutely right, and I note that he was supported by some typical grunts from my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). There is no doubt at all that one of the great faults of purchase tax was the way in which, over the years, a whole variety of exceptions and special cases were accounted for. One of the great benefits of V.A.T. is that it is a broadly based tax which will avoid some of the ridiculous anomalies that were part of the purchase tax system.

Mr. Sheldon

In the further discussions with industry will the right hon. Gentleman make available in this House any discussion papers which are freely circulated to industry, and not conceal them as was the case when discussions took place previously?

Mr. Barber

The discussions which the Customs and Excise will have will be based on published information. The discussions by that Department before my Budget statement and before the White Paper was issued were based on the Green Paper which has been put before the House. If we are to have the simplest V.A.T. in Europe, which I am determined we shall have, it is essential that the Customs and Excise, in its discussion with trade and industry, shall not be hamstrung in any way. I hope the House will agree with that attitude.

Sir G. Nabarro

Does my right hon. Friend not agree that the value-added tax on the basis introduced by my right hon. Friend has been extremely well received by industry, trade and commerce, and augurs well for the future—without prejudice to individual views that may be held about the Common Market?

Mr. Barber

Yes, I agree entirely with my hon. Friend. This is largely due to the enormous amount of work and consultations which were undertaken by the Customs and Excise.

Mr. Joel Barnett

Despite what the right hon. Gentleman says, is he aware that the other night his Minister of State seemed to indicate that he would not be prepared to consider in the Finance Bill debates any Amendment whatever? Does he not regard this as a gross discourtesy to the House, if not contempt? Will he make it quite clear that the debates will be seriously listened to, and that Amendments will be considered?

Mr. Barber

Any Amendments which are selected by the Chair will be debated and will be answered by a Treasury Minister. I have taken note of what I understand to be in the hon. Gentleman's mind, namely, that he will be prepared to listen to any answers that are given in those debates.

25. Mr. Spriggs

asked the Chancellor of the Exchequer how much his proposals for value-added tax will add to the price of children's clothing, school uniform, and footwear, respectively; and if he will make a statement.

Mr. Higgins

No accurate estimates can be given, since the tax burdens on these goods resulting from imposition of V.A.T. will to some extent be offset by the abolition of S.E.T., the effects of which on individual goods cannot be quantified.

Mr. Spriggs

Would the hon. Gentleman bear in mind that schoolchildren take a fairly high proportion of a family income for school wear and footwear? When considering this matter, will he bear in mind the heavy cost involved in bringing up a young family?

Mr. Higgins

Of course the heavy cost of bringing up a young family and many other factors concerned with the position of those on low incomes were borne in mind in the design of V.A.T. The hon. Gentleman will appreciate, when we are substituting V.A.T. for purchase tax and S.E.T., that purchase tax itself involves a tax burden on items such as food and housing, which of course will no longer bear those taxes under the V.A.T. system, because they will be zero rated. One must take the package as a whole. We have given a great deal of attention to the very kind of point which the hon. Gentleman has made.

Dr. Stuttaford

Does my hon. Friend agree that the present exemption of children's shoes from purchase tax has been a factor in ensuring that British children's feet are net so deformed as those of Continental children? We should like to see this state of affairs continue under V.A.T.

Mr. Higgins

These are all matters which we can debate in Committee on the Finance Bill. The essential point is that there is no reason to suppose that V.A.T. as a whole will be regressive

Mr. Simon Mahon

Is the hon. Gentleman aware that, apart from other considerations, the cost of school uniforms and children's clothing has for a long time been a positive scandal in this country and is hitting family life very hard. Has he not considered some form of inquiry into the effect on family life of the high cost of uniforms and other clothing?

Mr. Higgins

That is a different question. I shall carry out a survey myself, having one child of 1½ years and another of 3 years. As for the overall cost of the tax, as I said, it will not be regressive.

Dame Irene Ward

But my hon. Friend will know that for a very long time I have been asking for an assurance that those on low incomes—not those people whom one can help with State benefits—should be protected. Would it net be a good idea sometimes to ask ordinary people in the House, of whom there are many, whether the Treasury would not like a little advice from us? I do not think that the top Treasury officials live ordinary lives.

Mr. Higgins

As I sought to indicate, in my personal experience I cannot be held to be out of touch with this issue. But the whole point is that in designing this tax we had in the forefront of our minds the question whether the tax would or would not be regressive. As I said, as a result of the way in which it is designed we do not believe that that is so.